The government has pledged to raise the Philippines to upper-middle income status next year, an ambitious goal that will require a high growth rate and economic diversification.
Economic managers insist that the goal remains in sight despite the World Bank continuing to classify the country as lower-middle income and also raising the thresholds to qualify for the next level.
The country recorded a gross national income (GNI) per capita of $4,230 in 2023, an improvement from $3,950 a year earlier but still within the $1,146-$4,515 range that was raised from $1,136 to $4,465 previously.
Upper-middle-income status also now requires a per capita GNI of $4,512 to $14,005, up from the previous range of $4,466-$13,845.
Earlier this month, Finance Secretary Ralph Recto told The Manila Times that he was "confident we can attain UMIC (upper-middle income country) [status] by the end of next year."
"If not 2025 then 2026. But if I recall the data, we should be UMIC next year," he said, adding that "a nominal growth of 10 percent should take us there."
Nominal gross domestic product growth, which is not adjusted for inflation, was reported at 8.8 percent as of March 2024, lower than the 9.28 percent recorded in December 2023.
Security Bank Corp. chief economist Robert Dan Roces said hitting the income status goal by the end of next year remained "ambitious" and was hinged on boosting investment, upskilling the workforce and modernizing agriculture.
It will require "sustained high growth, poverty reduction and economic diversification," he said, adding that the government would have to double down on infrastructure development, support the small and medium firms that make up most of Philippine business, and improve tax collection.
President Ferdinand Marcos Jr., Roces continued, should in his upcoming State of the Nation Address "seek to address these crucial areas to solidify the Philippines' economic trajectory, providing a future-proof roadmap of continuity even beyond the term of the current administration."
In Southeast Asia, Singapore and Brunei have the highest classification of high-income economies ($14,006 or more). Neighboring Malaysia, Thailand and Indonesia, meanwhile, are already in the upper-middle-income category.
Cambodia, Myanmar, Vietnam and Laos, along with the Philippines, continue to be classed as lower-middle income.
Countries reclassified by the World Bank as upper-middle-income status for the 2025 fiscal year were Algeria, Ukraine, Iran and Mongolia.
Recto said the country's "increasingly robust labor market, better job quality, and its historic gross national income per capita solidify the Philippines' positive trajectory towards reaching an upper middle-income status by 2025."
"Our main focus now is sustaining this momentum for the Philippines to graduate into an upper middle-income status by next year and reduce the poverty rate to only 9 percent by the end of the President's term," he added.
"We are working doubly hard to ensure that all Filipinos reap the rewards of strong economic growth through more comfortable lives and more high-quality jobs."
Budget Secretary Amenah Pangandaman, meanwhile, said the proposed national budget for next year would prioritize funding for programs and projects supporting the 2023 to 2028 Philippine Development Plan.
The majority of the 2025 budget will be allocated to social and economic services, aiming to "promote human and social development, protect purchasing power, increase income, modernize agriculture, ensure economic stability, upgrade infrastructure and accelerate climate action."
Economic managers have raised the 2025 national budget proposal to P6.352 trillion, up from P6.2 trillion previously. It is now equivalent to 22 percent of gross domestic product instead of 21.4 percent and is 10.1 percent higher than this year's P5.768-trillion budget.
Socioeconomic Planning Secretary Arsenio Balisacan also said he was optimistic that the income goal would be met but added that the "mission is far from complete."
"The government must persist in its efforts to ensure that our economic gains are shared equitably, with the aim of reducing the poverty rate to a single-digit level by 2028," he said.
"We are working double time to further improve the policy and regulatory environment to enable a balanced mix of industries that will sustain the growth of the Philippine economy in the years to come," he added.
"With our accelerated infrastructure drive enhancing connectivity across the country, we also want more of our lagging regions contributing to our growth as we also push for inclusivity."