According to the National Economic and Development Authority (NEDA), the Philippines stays on course to realize upper-middle-income status by 2025, despite the federal government lowering economic growth targets this 12 months. Last 12 months, the World Bank predicted that the Philippines would likely achieve upper middle income status in 2025 or 2026.
The Philippine government has revised its GDP growth goal to 6 to seven percent from the previous 6.5 to 7.5 percent and stays consistent with the 6.5 to eight percent growth goal for 2026-2028.
During a press conference in Malacañang, NEDA Secretary Arsenio Balisacan said the country continues to be on course to realize upper-middle-income status next 12 months. He stressed that the gross national income (GNI) threshold per capita of virtually $4,500 should be achieved.
Previously, a study presented by ANZ economists Sanjay Mathur, Krystal Tan and Debalika Sarkar predicted that the Philippines would achieve upper-middle income status by 2031. This exceeds the federal government’s original 2025 goal, especially amid a broader slowdown in growth across the country. Economy of the Association of Southeast Asian Nations (ASEAN).
An upper middle income country ranges from $4,466 to $13,845 GNI per capita. According to the World Bank, the Philippines is currently classified as a lower-middle-income country with a per capita GNI of roughly $3,950, a classification that has been in effect since 1987.
Balisacan also mentioned that the federal government is working to cut back the poverty rate to single-digit levels by 2028 from 18.1% in 2021. The World Bank, in its recently released macroeconomic forecast for the Philippines, projects poverty rates to say no to single-digit levels by 2026. This projection features a decline in poverty rates, as measured by the poverty line in lower middle-income countries of $3.65 per day, to 12.2 percent on this 12 months and 9.3 percent. until 2026.
Meanwhile, the ANZ report indicates that the region will see slower growth within the working-age population and a possible decline in capital accumulation, although the Philippines is in a good demographic phase with the vast majority of the population being of working age. The study highlights the importance of accelerating labor force participation rates (LFPR) within the Philippines, especially because the country, together with Indonesia and Malaysia, has a lower LFPR in comparison with high-income countries.
However, ANZ emphasizes that increasing LFPR will not be a natural process, but requires significant policy interventions to facilitate the absorption of labor into manufacturing activities. In this context, governments need to extend digital skills, improve digital infrastructure and create an enabling environment to support digitalization in sectors resembling public services, education and business. Effective interventions can deliver significant advantages and potentially end in overall GDP growth of 0.5-0.7% in comparison with baseline projections.
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