High income status for Philippines unlikely in 2040 – DEPDev

Sans faster, more inclusive growth

MANILA, Philippines — The Philippines may miss its goal of becoming a high-income country and its vision of a society free from poverty by 2040 if the economy continues to grow at its current pace, according to the Department of Economy, Planning and Development (DEPDev).

In a press conference yesterday, DEPDev Secretary Arsenio Balisacan said that the COVID pandemic has set back the country’s progress in achieving its 2040 vision.

“Because remember in 2020, the economy contracted…That’s quite a big deal, a lot of contraction. And what that meant is we lost three years of growth momentum. So that 2040 goal at the current growth rate, is not likely going to be feasible anymore,” he said.

Under the AmBisyon Natin 2040, the country’s vision is to become a high-income economy and have prosperous, predominantly middle-class society where no one is poor.

If the economy can grow at a faster pace and make growth more inclusive, Balisacan said the country may still achieve the vision in the 2040s.

He said the Philippines’ neighbors like Vietnam and Indonesia are aiming to achieve at least eight percent or double-digit growth rates to join the high-income club.

“That is the kind of aspiration that we must have, not only for our administration, but for the succeeding administration,” he said.

“I am not happy with six percent growth because with six percent, we will be overtaken by the race. We need to grow faster,” he said.

The Philippine economy grew by 5.7 percent in 2024.

For this year, the government revised its growth target to 5.5 to 6.5 percent from six to eight percent, previously, given external risks including the US reciprocal tariffs.

For 2026 to 2028, the government also lowered the annual growth targets to six to seven percent from the previous six to eight percent.

To reflect changing conditions, the DEPDev has also recalibrated the targets under the Philippine Development Plan (PDP) 2023 to 2028.

Under the PDP, the government is now aiming for six to seven percent growth per year from 2026 until 2028.

To achieve higher growth rates, Balisacan said the country needs to address structural, technical and institutional constraints.

He said the updated PDP outlines strategies to address these challenges.

“From 2025 to 2028, the Marcos administration is committed to sustaining rapid and inclusive economic growth. We do this by promoting economic diversification, maintaining sound macroeconomic fundamentals, strengthening competitiveness and innovation and reducing poverty to single-digit levels by the end of the term,” he said.