PH is scheduled to achieve UMIC status in 2025

The Philippines has a good chance of reaching upper-middle income status next year if economic growth targets are met, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said on Friday.

“We have a good chance of achieving Upper Middle Income Country (UMIC) status in 2025,” Balisacan said during the year-end briefing at the NEDA office in Mandaluyong City.

The World Bank defines UMIC economies as those with gross national income (GNI) per capita between US$4,516 and US$14,005 for fiscal year 2025.

Socioeconomic Planning Minister Arsenio Balisacan. File photo

GNI per capita measures economic output per citizen and includes both domestic and international partners.

At the end of 2023, the Philippines’ per capita GNI was $4,230.

According to Balisacan, to achieve UMIC status, the country must achieve the growth target this year and maintain the growth trajectory in 2025.

He also pointed out that the peso should not become significantly weaker against the currencies of the country’s trading partners.

Balisacan is optimistic that the lower end of the government’s growth target of six percent will still be achieved this year.

Philippine economic growth averaged 5.8 percent in the first three quarters of 2024.

“We remain optimistic about economic performance in the fourth quarter. Holiday spending, more stable commodity prices as well as robust remittance inflows and labor market make us confident that our 6.0 to 7.0 percent growth target is still achievable,” Balisacan said.

However, Balisacan noted that the series of typhoons that hit the country in recent months had an impact on the agricultural sector.

“On the other hand, the positive forces could outweigh developments in the agricultural sector,” he said.

Balisacan said the Bangko Sentral ng Pilipinas’ decision to cut overall policy interest rates by 50 basis points and reduce reserve requirements is expected to boost private spending growth in the coming quarters, particularly on expensive consumer goods and investments in capital-intensive infrastructure.

“This move will support economic growth by making borrowing more affordable for businesses and consumers,” he said.

Easing inflation, continued robust labor market and continued growth in remittances would also help boost economic growth.

Balisacan said the government’s goal of reducing nationwide poverty from 15.5 percent in 2023 to a single-digit rate by 2028 is also achievable.

“Maintaining low and stable prices is crucial to reducing poverty and making economic growth more inclusive,” he said.

“We will continue to enhance our social protection programs, particularly through digital solutions enabled by the National ID, to protect our achievements and ensure that no one is left behind,” Balisacan added.

Balisacan, meanwhile, said external growth risks include geopolitical tensions, great power rivalry and uncertainty due to political-economic dynamics within and between the country’s key trading partners such as the United States.

“With the impending inauguration of US President-elect Trump, we are confident that the Philippines is ready to work with any economy and adjust our policies accordingly, as we have continuously built solid and close relationships with the US and other countries,” said he said.