Upgrade seen from 2025 lower-middle income WB category
Finance Secretary Ralph Recto said the Philippines may go up a notch to upper-middle income status (UMIC) next year from this year’s lower-middle income (LMIC) category by the World Bank.
He said the economy remains on track to grow further in 2026.
“We expect to achieve UMIC status by the end of this year or next year,” Finance Secretary Ralph Recto said in a text message to reporters on Wednesday, referring to the government’s economic team.
The World Bank just released its 2025 income classification also on Wednesday, showing the Philippines’ gross national income (GNI) per capita rose to $4,470 in 2024 from $4,320 in 2023. (See sidebar)
The figure falls just short of the $4,496 threshold needed to graduate into the UMIC category.
Recto emphasized that the government’s expansionary policy is geared toward sustained economic growth.
“We have an expansionary budget this year and next to support growth, employment, and poverty reduction,” he said. “We are investing in both human capital and infrastructure. We are focused on ensuring inflation is within target and will continue to reduce interest rates to support investments and consumption.”
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said reaching UMIC status in the next one to two years is possible, provided growth momentum continues and inflation remains manageable.
“Provided economic growth sustains as one of the fastest in Asean and remains resilient being consumer-driven, and inflation stays benign amid global headwinds and geopolitical risks, the upgrade is achievable,” Ricafort said.
He added that the government’s wider budget deficit would help support economic expansion.
“The recent wider budget deficit or deficit spending would help boost economic growth to counter global headwinds such as Trump’s tariffs and geopolitical risks, especially in the Middle East, amid policy priority on economic growth through expansionary fiscal policy and monetary easing,” he said.
John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said a transition to UMIC status by 2025 remains attainable, though the opportunity window is narrowing.
“The recent DBCC revisions reflect global headwinds, but if the country sustains strong GDP growth above six percent, controls inflation and maintains a stable exchange rate, the required per capita income threshold can still be met,” Rivera said.
He said key contributors to this goal include resilient domestic consumption, more efficient public spending, steady remittances, and continued growth in services exports such as IT-BPM and tourism.
“However, any shocks to these areas—especially if geopolitical risks deepen—could delay the transition,” Rivera added.
