PH eyes upper middle-income status by 2026 despite global headwinds - NEDA, DFA

Metro Manila, Philippines - The Philippines is unlikely to reach upper middle-income status this year, but it remains on track to achieve the milestone by 2026, economic and foreign affairs officials said in a high-level briefing ahead of an international conference on middle-income countries.

National Economic and Development Authority Secretary Arsenio Balisacan said the country needs to hit at least 6 percent gross domestic product (GDP) growth in both 2024 and 2025 to cross the income threshold set by the World Bank.

“Not this year. Probably not this year,” said Balisacan, explaining that the classification will depend on this year’s economic performance, which will only be validated in mid-2026.

“The upper middle-income status is challenging,” he added. “But if we get 6 percent this year and 6 percent next year, we should achieve that upper middle-income status.”

Balisacan said the government is preparing for the transition, which will entail the gradual loss of access to concessional financing, official development assistance and other preferential treatment currently afforded to lower-income countries.

“Our development partners, our bilateral partners have been talking with us on these options. By graduating to an upper middle-income class and combining that with good fiscal order... all this good housekeeping should eventually redound to an improvement in our credit rating,” he added.

He explained that with improved credit standing, both government and private sector borrowing costs could decline, enabling continued development and infrastructure financing through commercial channels, without compromising macroeconomic stability.

The World Bank currently classifies countries as upper middle-income if their gross national income per capita is between $4,466 and $13,845.

Earlier estimates pegged the Philippines’ 2024 growth at around 5.9 percent, short of the 6 percent lower-bound target, amid weak export performance and global uncertainties. The Philippine Statistics Authority slightly raised its 2024 GDP forecast to 5.7 percent, but challenges remain.

Foreign Affairs Secretary Enrique Manalo, meanwhile, emphasized the importance of rethinking outdated development models that fail to reflect the realities of middle-income countries.

“We're seeking to address outdated models of development... to develop more robust and accurate formulas that take into account the real situation of countries,” he said.

Manalo stressed that being a middle-income country should not come with limitations. “The role of middle income and development should not be penalized,” he said, urging for more inclusive access to financing, innovation, and climate support.

His remarks come as the Philippines prepares to host over 100 delegations at the High-Level Conference of Middle-Income Countries from April 28 to 29 in Manila.

The event, organized with support from the UN and development agencies, aims to craft a Strategic Plan of Action for Middle-Income Countries.

The conference is expected to address shared challenges such as climate vulnerability, inequality, and technology access while promoting south-south and multilateral cooperation.