Upper-middle income, what now?

We can’t pop the champagne just yet, even if we wanted to.

You see, the World Bank did not certify that every Filipino had become better off. It did no such thing. It merely determined that, on average, the Philippines’ income per person had crossed a statistical threshold.

In short, crossing into upper-middle income status tells us something about the economy’s size and growth, and far less about whether ordinary Filipinos feel that their lives have improved.

Because, as most of us know, see and feel now – households and even businesses alike – times are far from easy.

In a way, this reclassification is a bit like graduating after nearly four decades in lower-middle income status.

We’ve donned our black toga, walked up the stage with our heads held high and finally, after years of hard work, received our much-awaited diploma. We are now officially graduates. It’s exciting and perhaps, exhilarating.

Yet, it’s also a lot like what it means to be a graduate in the real world – after receiving the diploma, the real work begins. There are more challenges, higher standards and greater responsibilities. You’re now expected to make it on your own, with less help, if any.

In the case of the Philippines, economists have warned that our access to concessional loans and preferential trade arrangements may no longer be as favorable as before.

Expect higher interest rates and stricter repayment terms.

The Marcos administration is set to borrow P2.68 trillion this year, P3.043 trillion in 2027 and P3.04 trillion in 2028, according to the latest Budget of Expenditures and Sources of Financing document.

And just like a university graduate, the allowances may shrink or be cut altogether. That could mean a reduction in aid, grants and tariff perks as the international community shifts more of its support toward lower income countries.

But hopefully, with our upper-middle income country status, we will attract more investments that create jobs for more Filipinos.

Dirty politics threatens gains

The challenge now is to sustain our income classification and ensure that growth is sustained and inclusive. In short, it must translate into concrete improvements in people’s lives.

At the end of the day, it’s about achieving growth whose impact trickles down to the grassroots.

That should be the goal.

But one big challenge is our politics – too dirty, too personal, too messy.

This is largely thanks to the warring ruling families, the Marcoses and the Dutertes, who both seem obsessed with destroying each other.

Politicians and lawmakers have become pawns of the two political clans, driven more by loyalty to their respective camps than by the interest of the Filipino people.

None of them, it seems, is capable of rising above dirty politics and partisanship.

This toxic politics has cast a cloud of uncertainty over the economy, which has already been battered by corruption in flood control projects and the Middle East crisis.

Last year, the economy expanded by just 4.4 percent, the weakest growth rate since the pandemic recovery. Economic managers expect GDP to grow by 3.5 to 4.5 percent this year.

What the World Bank said

The World Bank said in its announcement that “the Philippines achieved its reclassification through broad-based expansion.”

“GDP grew at an average of 5.8 percent per year over five years, reflecting gains across all major industries, not a single-sector boom, but an economy-wide shift.”

We also joined other countries that were reclassified from lower-middle to upper-middle income status.

Vietnam

“Powered by an export-led model, the country saw exports surge by more than 15 percent in both 2024 and 2025, with its GDP growing by seven percent and eight percent, respectively. GNI expanded at an average of 10 percent annually between 2021 and 2025 – one of the strongest sustained performances in the region,” the World Bank said.

It’s clear that Vietnam, once a laggard in the region, has already overtaken us.

Sri Lanka

Sri Lanka, meanwhile, is a story of recovery, according to the World Bank.

“Just three years after a severe economic crisis brought the country to the brink of collapse in 2022, real GDP grew by five percent in 2025, driven by a rebound across industries and growth in financial and tourism services.”

Micronesia

Micronesia achieved modest but steady growth following a prolonged COVID-19 recovery, with construction and agriculture as the main drivers. A significant decline in net primary income tempered the overall gains.

Jordan

Jordan, for its part, was reclassified because of a comprehensive revision of its national accounts. When Jordan’s Department of Statistics completed a rebasing exercise, it found that the economy was nearly 10 percent larger than previously estimated because of expanded statistical coverage through updated surveys, new data sources and enhanced national accounts compilation methodology.

For now, we can applaud the reclassification, but, as I said, we can’t pop the champagne just yet, as much as our government – desperate for good news we haven’t had in a long time – wants to.

We have merely crossed a statistical threshold. The real indicator of success will come when every Filipino feels the benefits of that progress in everyday life.

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