$26 to go: Philippines nearly cracks the upper middle-income league
Philippines misses UMIC status by a cliffhanger, nation inches closer to economic upgrade
Manila: The Philippines has fallen short of achieving the Upper Middle Income Country (UMIC) status in 2025, missing the mark by a narrow margin of $26 in Gross National Income (GNI) per capita, according to the latest World Bank data for fiscal year 2026.
The country’s GNI per capita stood at $4,470 in 2024, just below the UMIC threshold of $4,496 to $13,935 set by the World Bank.
What is the UMIC standard and who sets it?
The Upper Middle Income Country (UMIC) classification is set by the World Bank, which uses GNI per capita as the key metric.
Income groups, as per World Bank
The World Bank defines income groups as follows:
| Income Group | GNI Per Capita (US$) |
|---|---|
| Low income | $1,135 or less |
| Lower middle income | $1,136 – $4,495 |
| Upper middle income | $4,496 – $13,935 |
| High income | $13,936 or more |
This indicator reflects the average economic prosperity and standard of living in a country.
By how much did the Philippines miss?
Despite a rise from $4,320 in 2023 to $4,470 in 2024, the Philippines was $26 short of the minimum UMIC threshold of $4,496.
This shortfall, though small, means the country remains classified as a lower middle-income economy for now.
Why did the Philippines miss the target?
The Philippines' goal to reach UMIC status by 2024, as set by President Ferdinand Marcos Jr. in his 2022 State of the Nation Address, has been repeatedly pushed back due to several factors:
Global economic uncertainties and headwinds affecting growth prospects.
Structural challenges such as competitiveness, infrastructure gaps, governance and productivity issues.
Despite steady economic growth, the country’s GNI growth rate has not been sufficient to cross the threshold by 2025.
Steps the Philippines must take to achieve UMIC
To reach UMIC status, the Philippines needs to pursue a multi-pronged, whole-of-nation strategy focusing on sustainable and inclusive economic growth:
Boost economic growth: Sustaining a growth rate of around 6% or higher is critical. Economic Planning Secretary Arsenio Balisacan projects that the country could reach UMIC by 2026 or 2027 if growth targets are met.
Invest in infrastructure: Accelerate infrastructure development to improve connectivity, reduce costs, and enhance productivity across sectors, as per the Business World.
Enhance human capital: Invest in education, health, and social protection to improve labour productivity and quality of life.
Boost competitiveness: Address structural reforms to improve the business environment, attract more foreign and domestic investments, and enhance innovation capacity.
Agriculture and manufacturing productivity: Boost productivity in key sectors like agriculture and manufacturing to diversify and strengthen the economy.
Inflation and macroeconomic stability: Manage inflationary pressures and maintain fiscal discipline to create a stable environment conducive to growth and investment.
Commitment and outlook
The Manila government remains optimistic and committed to achieving UMIC status, with officials pledging to “double efforts” to meet this goal despite current global challenges.
The Philippine Development Plan 2023-2028 supports this vision by targeting poverty reduction, inclusive growth, and infrastructure investments.
'Within reach'
While the Philippines missed the UMIC mark by a slim margin in 2025, expert analysts and government officials suggest that with sustained reforms and growth, achieving upper middle-income status by 2026 or 2027 remains within reach.
Fact file: Philippines and Upper Middle Income Status
| Indicator | Data/Information |
|---|---|
| Latest GNI per capita (2024) | $4,470 |
| UMIC threshold (GNI per capita) | $4,496 - $13,935 |
| Missed UMIC status by | $26 |
| Current income classification | Lower middle income |
| World Bank classification basis | GNI per capita (Atlas method) |
| Government target for UMIC status | Initially 2024, now expected 2025-2027 |
| Key challenges | Structural reforms, competitiveness, infrastructure, inflation |
| Projected economic growth for 2025 | 5.3% to 6%+ (government target) |
| Neighbouring UMIC countries | Malaysia, Thailand, Indonesia |
| Lower middle-income neighbours | Vietnam, Cambodia, Laos, Myanmar |
The Asian nation, home to more than 115 million inhabitants (2023 data), continues its journey toward higher economic status, with a narrow miss in 2025.
Bottomline: It underscores the need for accelerated reforms and sustained growth to hit its UMIC aspirations.
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