What upper-middle income means

Amazing, the cynicism that greeted the World Bank’s July 1, 2026 upgrade of the Philippines into an upper-middle income country (UMIC), with a Gross National Income (GNI) per capita of $4,850 – $214 more than the $4,636 threshold in 2025.

In this year’s update to the World Bank Group Country Income Classifications, five countries became upper-middle income class: Jordan, Micronesia, the Philippines, Sri Lanka, and Vietnam. Each has a different story to tell. A country emerging from economic crisis, an export powerhouse outpacing its peers and an economy that turned out to be 10 percent larger than previously thought are just three of them.

“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,” said the World Bank. The Philippines had emerged from its worst economic crisis in a century, the 9.5 percent GDP growth decline in 2020 due to COVID.

Under Ferdinand R. Marcos Jr., the economy grew by a 5.8 percent average in the first four years of his presidency – 7.6 percent in 2022, 5.8 percent in 2023 and 2024 and 4.4 percent in 2025.

In GNI value, growth was even more remarkable – 9.9 percent in 2022, 10.4 percent in 2023, 7.7 percent in 2024 and 6.1 percent in 2025, an average of 8.6 percent in four years. Subtract yearly population growth of 1.4 percent, you get net per capita GNI growth of 7.2 percent per year. Your income, here and abroad combined, has been growing by 7.2 percent, yearly, despite the population expanding by 1.4 percent yearly, to the present 117 million people.

In 2025, the GNI per capita was $4,850. In the World Bank, once you earn $4,636 GNI per capita, you are automatically upgraded to upper-middle income, from lower-middle income category (LMIC).

Since 1987, or for 38 years, or nearly four decades, the Philippines had languished at being an LMIC – medyo rich pero hindi naman.

The difference between GDP and GNI is where production happens. GDP measures local production; GNI measures both national (or domestic) and international production or money coming in or earned abroad.

Under BBM, GDP growth averaged 5.8 percent per year; GNI growth averaged 7.2 percent. Deduct 5.8 from 7.2, you get 1.4 percent. The 1.4 percentage points are the contribution mainly of our overseas Filipino workers (OFWs) or expats who number 12 million scattered in more than 130 countries.

In 2025, our GDP was P28.010 trillion; GNI was P32.198.8 trillion. The P4.188-trillion difference (P31.19 trillion less P28.01 trillion) is the income earned by the Philippines from production abroad. That’s the work mostly of our OFWs.

So when you denigrate the Philippines’ upgrade to upper middle income country (UMIC) status, you in effect denigrate the hard work, compassion, professionalism and excellence of our 12 million Filipino expats who contribute P13 of every P100 produced by the total economy yearly.

There are 25 million Filipino families. If each of the 12 million Filipino expats has a family, it means nearly half, 48 percent, of total Filipino families, have an OFW.

“The milestone (to UMIC) affirms the effectiveness of the government’s economic policies implemented over the four years,” said Marcos Jr.

“After nearly four decades as a lower-middle income country since 1987, this milestone affirms that the economic policies we have pursued over the past four years have been effective,” the President said in a video message.

“Our steady economic growth, broadly stable currency and long-term reforms have strengthened our economy even amid global uncertainties. It validates the progress we have made and the resilience of the Filipino people,” gushed the Chief Executive with considerable pride.

Also, the feat is a vote of confidence in the country’s future, as greater confidence means more investment, which in turn leads to more businesses, better-quality jobs and more opportunities for Filipinos.

Economic progress is not meant to stay on paper, the President stressed, “it means opening doors, putting food on the table and giving every Filipino the chance to build a better life.”

PBBM vows to continue working “until every family feels the benefits of our country’s progress.”

The country’s UMIC status was driven by sustained growth, sound macroeconomic management and long-term structural reforms, said Economic Planning Secretary Arsenio Balisacan.

The new classification should strengthen the country’s credit profile, boost investor confidence and expand access to financing and higher-quality investments that generate better jobs for Filipinos, predicts the Department of Economy, Planning and Development.

However, Balisacan cautioned, the new classification does not diminish ongoing challenges, noting the priority is “to ensure that growth becomes more inclusive and that it benefits all Filipinos.”

“The Philippines’ move to upper-middle income status is an important milestone that reflects years of steady economic progress. It signals that the country’s productive capacity and incomes have improved over time,” chimed in Bangko Sentral ng Pilipinas Governor Eli Remolona, adding:

“The move underscores the importance of the efforts to preserve macroeconomic stability and sustain structural reforms by the national government. On the part of the BSP, it underlines the importance of managing inflation to encourage investment and protect the purchasing power of Filipino households; maintaining adequate international reserves to ensure confidence; ensuring banks are solid and able to support economic growth and payment systems are modernized to provide businesses and consumers fast and safe transfers.”

For his part, Finance Secretary Frederick Go sees the Philippines’ UMIC status as “an affirmation of the reforms and policies that the government has consistently pursued to strengthen our economic fundamentals and create more opportunities for our people. Now, we must continue to build on these gains so that the benefits of economic development reach more Filipinos.”

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