The Philippines reached upper-middle-income status after nearly four decades as a lower-middle-income economy, with gross national income per capita hitting $4,850, above the World Bank's $4,636 threshold. Department of Economy, Planning, and Development Secretary Arsenio Balisacan stated during a press chat on Monday, July 6, that upper-middle-income status marks another stage in the country's development journey. The milestone reflects economic progress but sits alongside persistent challenges, as millions of Filipinos still experience daily economic insecurity despite the upgraded classification.
World Bank Defines Upper-Middle-Income Threshold at $4,636
The World Bank groups economies into four income categories: low income, lower-middle income, upper-middle income, and high income. Upper-middle-income economies are those with GNI per capita of $4,636 to $14,375, while high-income economies are those above $14,375. GNI per capita represents an average calculated by taking income earned by Filipinos and Philippine entities, including income from abroad, then dividing by the population.
Balisacan said development is not measured by average income alone. "It's measured by whether growth creates quality jobs, increases productivity, expands opportunities, reduces poverty, and improves the quality of life of our people," he stated. He pointed to the "wide distribution around the mean," meaning the national average can be pulled up by those earning far more than most Filipinos, while many households remain well below that level.
Philippines Poverty Rate Dropped to 15.5% in 2023
A World Bank report released in June said the country's poverty rate fell to 15.5% in 2023 from 23.5% in 2015. Income inequality also declined to its lowest level in four decades, with the Gini coefficient falling below 40 for the first time. Balisacan confirmed the Philippines had long been classified as a high-inequality country but recent data showed improvement. "We have come down from above 40 to less than 40, 39," he said.
The same report stated nearly 28% of Filipinos remain vulnerable or at risk of falling back into poverty. The secure middle class, at about a quarter of the population, has barely grown since 2018. The report warned that the typical Filipino family earns enough to stay above the poverty line, but not enough to feel secure.
Philippine Economy Grew 2.8% in First Quarter 2026
The economy grew by only 2.8% in the first quarter of 2026, according to the Philippine Statistics Authority. Balisacan previously attributed slower growth to the energy crisis, higher oil prices, and the lingering effects of corruption allegations tied to flood control projects, which slowed government spending. He said that after the 2.8% first-quarter expansion, the economy must grow by an average of 3.7% over the last three quarters to hit the low end of the 2026 target, and by 5.07% to reach the high end.
Balisacan stated the deeper reason many Filipinos still feel poor is that the Philippines has historically grown more slowly than several of its neighbors. "If you're asking why we are poor, the big part of the story is that the country has not grown as fast as our neighbors," he said. Malaysia reached upper-middle-income status around 1989, while Thailand did so around 2011.
Government Cut 2026 Growth Target to 3.5%-4.5%
The government cut its 2026 growth target down to 3.5% to 4.5% from an initial target of 5% to 6%. Balisacan said the Philippines faces a two-fold challenge. "Our challenge is both," he stated. "It's not just improving the growth, making the growth faster, but also to make that growth more inclusive so that poverty reduction can be faster."
Balisacan said the Philippines should not be content with 5% to 6% growth. "We should aim higher, just like what our neighbors are doing," he said, citing Vietnam's ambition to grow by 10% yearly and Indonesia's goal of at least 7%. "There's a lot of catching up to do with our neighbors."
FAQ
What is the Philippines' new GNI per capita?
The Philippines' gross national income per capita reached $4,850, which placed the country above the World Bank's $4,636 threshold for upper-middle-income economies.
What was the Philippines' poverty rate in 2023?
According to a World Bank report released in June, the Philippines' poverty rate fell to 15.5% in 2023, down from 23.5% in 2015.
How much did the Philippine economy grow in the first quarter of 2026?
The Philippine economy grew by 2.8% in the first quarter of 2026, according to the Philippine Statistics Authority, which led the government to cut its full-year 2026 growth target to 3.5%-4.5%.
