Aaron Michael C. Sy, Reporter
THE PHILIPPINES is projected to be an upper middle-income economy by 2025 or 2026, a World Bank official said.
“If you look at where the Philippines is in terms of the level of income per capita, and you project the increase in the income per capita over the next few years, our projection is showing the Philippines will [reach] that threshold of an upper middle-income country by 2025 to 2026 depending on how much the economy will grow in the period,” World Bank Country Director for the Philippines Ndiamé Diop said in an interview on the sidelines of the BusinessWorld Forecast 2024 economic forum on Nov. 22.
“So it’s a matter of a few years. I think the Philippines will get there.”
The World Bank’s forecast is in line with the Marcos administration’s target for the Philippines to reach upper middle-income status by 2025. An upper middle-income country means having a gross national income (GNI) per capita income range of $4,466 to $13,845.
The World Bank currently classifies the Philippines as a lower middle-income country with a GNI per capita of $3,950.
The Philippines has been classified as a lower middle-income country since 1987, which is the earliest available data from the World Bank.
Once the Philippines becomes an upper middle-income economy, Mr. Diop said the challenge is to “look good in terms of all your development indicators.”
“(This includes improving) access to clean water and sanitation, lowering stunting rate and poverty declining quite significantly. Development is not just about income. It’s income plus all the other factors that are important to the well-being of the population,” he said.
Mr. Diop noted the implementation of the Philippine Development Plan (PDP) would also support the country’s efforts to reach upper middle-income status.
In October, the World Bank cut its gross domestic product (GDP) growth forecast for the Philippines to 5.6%, from the 6% projection given in June.
It also trimmed its growth forecast for the Philippines to 5.8% for 2024 from 5.9% previously. These are below the government’s 6-7% target for this year and 6.5-8% in 2024.
Over the medium term, the World Bank has said the Philippine outlook will be supported by “strong domestic demand, driven by a robust labor market, continued public investments, and the positive effects of recent investment policy reforms which could boost private investment.”
The multilateral lender will continue to expand its lending program for the Philippines.
To date, total approved commitments from International Bank for Reconstruction and Development, the World Bank’s lending arm, to the Philippines for the fiscal year 2024 amount to $1.1 billion.
Mr. Diop said the World Bank is looking to finance projects that will focus on “reducing the digital divide, improving the quality of education, reducing malnutrition and stunting, and helping some of the lagging areas of the Philippines.”
“Look at the World Bank program, much of it is really based on that. It’s about nutrition, agriculture, it is really critical to achieve those goals. It’s about social protection, connectivity, and supporting education,” he said.
In 2022, the World Bank was the Philippines’ third-largest source of official development assistance (ODA). It accounted for 21.18% of the ODA portfolio, equivalent to $6.86 billion, through 29 projects and programs.