NEDA: Upper middle-income status for Philippines possible next year

MANILA, Philippines — The Philippines may attain upper middle-income status next year if the economy expands by at least six percent, the National Economic and Development Authority (NEDA) said.

“I think the upper middle-income status is challenging, but I think if we get six percent (growth) this year, six percent (growth) next year, we should achieve that upper middle-income status next year if we are able to get those growth rates,” NEDA Secretary Arsenio Balisacan told reporters.

Asked if it is doable this year, he clarified it likely won’t be this year as the World Bank’s data on country classifications by income level based on 2025 performance will only be released in the middle of next year.

Earlier, he said the government expects the country to reach upper middle-income status by this year or next year.

In 2024, the economy posted a revised 5.7 percent growth, below the government’s six to 6.5 percent growth target.

For this year and next, the government has set an annual growth target of six to eight percent.

However, Balisacan said reaching the upper end of this year’s growth target may not be realistic due to uncertainty caused by the United States’ imposition of reciprocal tariffs on trade partners including the Philippines.

The World Bank’s country classifications by income level are updated  each year on July 1, based on the gross national income (GNI) per capita of the previous calendar year.

Data released by the World Bank in July last year showed that the Philippines remained a lower middle-income country, despite the increase in its GNI per capita to $4,230 in 2023 from $3,950 in 2022.

Under the World Bank’s classification, lower middle-income countries are those with a GNI per capita of $1,146 to $4,515, while the threshold for the upper middle-income country grouping is at $4,516 to $14,005.

The Philippines has been classified as a lower middle-income country since 1987.

GNI per capita measures the country’s economic output per citizen, covering income derived from both domestic activities and overseas.

A higher GNI per capita correlates with greater economic prosperity and better standard of living.

While reaching upper middle-income status is important and the GNI per capita is a useful measure, Balisacan said it is a broad measure that does not capture everything, especially those that matter for the citizens’ well-being.

Beyond reaching upper middle-income status, he said it is important to look at employment, poverty and other indicators like literacy and hunger.

He said improving the quality of employment, in particular, would be important in improving the citizens’ well-being.

“So to get to that, we have to have investments,” he said.

To attract both foreign and domestic investments, he said the government would have to address issues raised by the private sector such as the need to improve ease of doing business, quality of infrastructure and governance.

While these are already being prioritized under the country’s overall development blueprint or the Philippine Development Plan, he said NEDA would want to do more in addressing investment barriers as it enters a new era as the Department of Economy, Planning and Development (DEPDev).

President Marcos signed the DEPDev Act, which seeks to reorganize the NEDA as a full-fledged department with expanded authority on April 10.

Prior to the signing of the DEPDev Act, NEDA was carrying out its functions through Executive Order 230, Series of 1987.

“The law now tasks us to produce the first long-term framework for the period 2025 to 2050,” Balisacan said.

He said the agency is also tasked to come up with a long-term comprehensive infrastructure development master plan.

“Over the years, we saw we had master plans that were not followed. You know why? Because nobody, no agency has been mandated to carry those plans forward, especially as government changes, as the administration changes,” he said.

Through the DEPDev Act, he said the agency would serve as the link between the outgoing and incoming administration to ensure that plans and projects would continue to be implemented.