By Aubrey Rose A. Inosante, Reporter
THE PHILIPPINES stays on track to graduate to upper middle-income country (UMIC) status this yr, despite a pointy growth slowdown in 2025, the Department of Economy, Planning, and Development (DEPDev) said.
Economy Secretary Arsenio M. Balisacan said the Philippines can still achieve UMIC status this yr despite the weaker-than-expected 4.4% gross domestic product (GDP) growth last yr.
“We still must redo the numbers, but with the 4.4% growth in 2025, we must always still have the opportunity to succeed in the typical income class status,” he told a briefing on Thursday.
The Philippines remains to be stuck within the lower middle-income bracket, having didn’t advance out of it since 1987, despite posting a higher gross national income (GNI) per capita of $4,470 in 2024.
Under the World Bank’s latest country classification, the Philippines’ GNI per capita was only $26 shy of the World Bank’s adjusted GNI per capita requirement of $4,496-$13,935 for UMIC status.
The Washington-based lender is scheduled to release its updated annual country status thresholds in July.
Last yr, Mr. Balisacan said the Philippines must sustain 6% growth from 2025 to 2026 to make sure its GNI per capita meets the UMIC threshold.
In 2025, Philippine GDP growth sharply slowed to 4.4%, from 5.7% in 2024. This was the weakest print in five years or since 2020 when GDP contracted by 9.5% amid the pandemic. Excluding the pandemic, it was the slowest growth for the reason that 3.9% expansion in 2011.
Mr. Balisacan said the economy’s potential growth still stands at 6%, which makes the federal government confident about achieving its long-term goal of constructing a predominantly middle-class society under AmBisyon Natin 2040.
“Actually, the investments that we’re making in human capital, particularly education and health and infrastructure, these can elevate that potential to a good higher one — 6.5% and even 7%,” Mr. Balisacan said.
Analysts said the Philippines achieving UMIC status carries symbolic weight but cautioned that it’s a weak measure of real development.
“Graduation to UMIC is very important symbolically but its real economic value will depend upon whether it comes with deeper structural shifts that raise living standards more broadly,” John Paolo R. Rivera, a senior research fellow on the Philippine Institute for Development Studies, said in a Viber message.
Even modest growth can lift per capita income if supported by stable employment, remittance inflows, and manageable inflation, Mr. Rivera added.
Jose Enrique “Sonny” A. Africa, executive director of IBON Foundation, said UMIC status is a “mere bureaucratic category” utilized by the World Bank to guide lending and grant-making.
“It’s a particularly poor indicator of real development because, as an illustration, any UMIC status the Philippines might get will probably be amid growing poverty, hunger, and volatile poor quality work,” he said in a Viber message.
TEMPERED TARGETS
At the identical briefing, Mr. Balisacan said the Development Budget Coordination Committee (DBCC) had tweaked the macroeconomic assumptions for foreign exchange rate and export growth, after cutting growth targets.
On external trade assumptions, the DBCC kept the products export growth at 2% this yr, unchanged from the June meeting.
It raised its goods export growth projection to three% in 2027, from the sooner forecast of two%.
“For the exports of services, we’re assuming 5% for 2026 and the identical growth for 2027,” he said.
The peso forecast range was widened to P58-P60 per dollar for 2026-2027, from the sooner projection of P56-P58 per dollar for 2025 until 2028, Mr. Balisacan said.
The peso has repeatedly breached the P59-a-dollar mark several times since November and sank to a record low of P59.46 on Jan. 15.
At its December meeting, the DBCC cut its GDP growth goal to 5-6% for this yr, from 6-7% previously. It set a 5.5-6.5% growth goal for 2027.
“Now, obviously, the lower growth for next yr… will impact revenue collections relative to what we initially expected,” Mr. Balisacan said.
The federal government is targeting to gather P4.824 trillion this yr, about 3.19% lower than the P4.983 trillion goal set within the June 2025 meeting.
For 2027, the revenue collection goal was cut by 4.55% to P5.122 trillion, while the revenue goal for 2028 was also reduced by 5.86% to P5.568 trillion.
Mr. Balisacan said government efforts, particularly in light of the flood control project scandal, were focused not only on expanding expenditures but in addition on enhancing spending quality.
“(It will make) sure that what we spend will actually find yourself with higher services and within the case of income transfers with the intended goal groups and in lots of cases with low-income households,” he added.