Philippines reaches upper-middle income status — World Bank

MANILA, Philippines – The Philippines is now classified as an upper-middle income country by the World Bank (WB).

The WB confirmed the upgrade in its latest country income classification update on Wednesday, July 1, placing the Philippines in the upper-middle income category after its gross national income per capita reached $4,850. This exceeded the $4,636 threshold set by the World Bank for upper-middle income economies.

“This confirms the resilience of the Philippine economy,” Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan said in a press release. “Despite global and domestic shocks, we have relentlessly pursued inclusive growth, strengthened fundamentals, and remained on track with our development agenda.”

The World Bank said the Philippines’ reclassification was driven by broad-based economic expansion rather than a boom in just one sector. The Philippine economy grew by an average of 5.8% from 2021 to 2025, with growth across major industries helping lift gross national income per capita by 8.5% in 2025.

The Philippines was one of five economies that moved from lower-middle to upper-middle income status this year, alongside Jordan, Micronesia, Sri Lanka, and Vietnam. Togo also moved up, but from low-income to lower-middle income.

The WB updates its income classifications every July 1, using gross national income per capita estimates from the previous calendar year. The classifications cover 218 economies this year and will serve as a global reference until the end of June 2027.

The categories also help determine access to concessional loans and development assistance, and are widely used by governments, researchers, and international institutions to track economic progress.

For the Marcos administration, the upgrade is expected to support investor confidence and help attract higher-quality investments that can generate better jobs.

DEPDev said some concessional official development assistance may decline over time, but argued that stronger fundamentals and improved access to market-based financing should outweigh these adjustments.

Structural problems remain

But upper-middle income status is not the same as broad prosperity. Gross national income per capita is a national average, not a measure of how income is distributed among households. It also includes income earned by Filipinos abroad, meaning overseas Filipino workers helped push the country across the threshold.

“Our OFWs have played an important role in reaching this milestone,” Balisacan said. “At the same time, our long-term goal is to create more high-quality jobs at home so overseas employment becomes a choice, not a necessity.”

The upgrade also comes at a time when many Filipinos continue to deal with elevated living costs. The latest available inflation data from the Philippine Statistics Authority showed headline inflation at 6.8% in May 2026, still above the Bangko Sentral ng Pilipinas’ 2% to 4% target range. Food and non-alcoholic beverage inflation stood at 5.7%, transport inflation at 16.2%, and housing, water, electricity, gas, and other fuels at 7.8%.

Inflation is still expected to remain elevated in June, with the BSP estimating that it settled within a 6% to 7% range. Some price pressures may have eased as domestic fuel prices declined and major food items such as rice and meat became cheaper. But these could be partly offset by higher electricity rates and vegetable prices.

Income inequality has eased, but remains a concern. PSA’s Family Income and Expenditure Survey placed average annual family income at P353,230 in 2023, while average annual family expenditure stood at P258,050.

Those averages, however, mask large differences across households and regions, with the National Capital Region posting the highest average family expenditure and poorer regions such as the Bangsamoro Autonomous Region in Muslim Mindanao among those with the lowest.

Job quality is another pressure point. In April 2026, the unemployment rate stood at 4.7%, equivalent to 2.41 million jobless Filipinos. But a larger number, 7.41 million employed Filipinos, were underemployed, meaning they wanted additional work hours, another job, or a new job with longer hours. The underemployment rate rose to 15.2% in April from 14.6% a year earlier.

Balisacan acknowledged that the new classification does not remove these structural problems.

“We acknowledge that income disparities persist, and many continue to face economic difficulties. Our priority is to ensure that growth becomes more inclusive, and that its benefits reach all Filipinos,” he said. – Rappler.com