The World Bank said the Philippines is likely to reach an “upper middle income country” status by 2027, not earlier as the country may be expecting, as the multilateral agency slashed its global economic growth forecasts.
The World Bank’s forecast is one year later than the Department of Economy, Planning, and Development Secretary Arsenio Balisacan’s most recent estimate that the Philippines will join upper-middle-income economies by 2026.
World Bank lead economist Gonzalo Varela told reporters on the sidelines of the High-Level Conference of Middle-Income Countries held in Makati on Monday: “It’s more likely that it happens in 2027. That’s what we are expecting.”
“Under an outstanding performance of the economy, it is (still) possible that they reach upper middle income status by 2026, (but) under the most likely scenario, we are saying that you will take a little bit longer,” he added.
In December 2024, the Department of Finance (DOF) said the Philippines achieved an unprecedented gross national income (GNI) per capita of $4,335 in 2023.
The World Bank defines lower-middle-income economies as those with a GNI per capita between $1,136 and $4,465, while upper-middle-income economies are those with a GNI per capita between $4,466 and $13,845.
The Philippines has been in the lower middle-income category since 1987.
GNI per capita measures citizens’ economic output, including domestic and international earnings.
The DOF said that a higher GNI per capita means greater economic prosperity and an increased standard of living.
“From the analysis that we have done and the scenarios that we have, it would be reasonable to expect that in a couple of years, the Philippines could be reaching the upper middle income status that is passing that threshold,” Varela said.
“Given these growth forecasts that we have for the domestic economy, for the global economy, we expect that the most likely case, and the reasonable assumption, is that it will take a couple of years for the Philippines to reach upper-middle income level status. Does that mean that it can’t happen in 2026? No. Things can happen that make the Philippines’ growth faster,” he added.
In his remarks during the same event, Balisacan said that barring major external shocks, and assuming a favorable global trade environment, “we are well-positioned to achieve upper-middle-income status by 2026.”
“Nonetheless, we remain acutely aware of the global economy’s uncertainties, ranging from systemic risks in economic institutions and technological disruption to environmental challenges. Addressing these risks and reinforcing economic resilience remain top priorities to ensure we stay firmly on the path of sustainable development,” Balisacan said.
“To sustain and accelerate our progress, we must embrace dynamic and decisive actions: mainstreaming efficient green transitions, fostering resilience, and harnessing innovation as new frontiers for growth,” he added.
Balisacan said that the Philippines aims to realize these goals through targeted investments, strengthened national institutions, workforce upskilling and reskilling, climate and biodiversity resilience integration, and the revitalization of partnerships.
Varela said the increase in economic uncertainty will likely affect economies like the Philippines, so efforts on domestic reform should double down.
“You can think about global economic uncertainty as a drag on investment. So what you want to do is double down on domestic reform, so at home, you reduce the cost of investments further and offset those effects of global uncertainty,” Varela said.
However, Varela called for streamlining regulations, which should be an “important agenda” for the Philippines to reduce the extra investment cost.
“Currently, a foreign firm that wants to set up shop in the Philippines takes 106 days to be registered. It takes (about) 15 days in Singapore. That is an investment cost, and it’s a cost to investment that can be reduced by streamlining that process, streamlining regulations, implementing reforms more speedily,” he added.
