Last July 1, the Philippines achieved its elusive dream of becoming an upper-middle-income economy, joining Jordan…

Last July 1, the Philippines achieved its elusive dream of becoming an upper-middle-income economy, joining Jordan, Micronesia, Sri Lanka, and Vietnam that went up a level on the latest classification of the World Bank.

The World Bank said the Philippines achieved its higher status “through broad-based expansion,” noting that the country’s gross domestic product grew at an average of 5.8 percent a year over five years, “reflecting gains across all major industries, not a single sector boom, but an economy-wide shift.”

This shift pushed up the Philippines’ gross national income (GNI) per capita–which measures the average income earned by a country’s residents and businesses, both here and abroad–to a record-high $4,850 in 2025, just past the threshold of $4,636.

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The importance of moving up to the next category cannot be diminished considering that the Philippines had been stuck in the lower-middle-income category since 1987.

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Thus finally being elevated after close to 40 years understandably drew cheers from the Marcos administration and the private sector that see the upgrade as a crowning moment, a feat for the ages as it is expected to increase confidence of investors to pour money into the growing economy and thus generate new and potentially better paying jobs for Filipinos.

‘A vote of confidence’

President Marcos hailed the ascent as “a vote of confidence” in the country’s future while Secretary Arsenio Balisacan of the Department of Economy, Planning, and Development said the move “confirms the resilience of the Philippine economy.”

But what does this “milestone” really mean for the ordinary Filipino, whose purchasing power continues to be weakened by elevated costs of basic goods and services such as food, energy, and transportation? Not much.

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Incomes will not magically improve, costs will not drastically go down just because the Philippines finally made it beyond the line that separated the lower from the upper-middle-income category.

For economist and Ibon Foundation executive director Sonny Africa, squeaking into the upper-middle-income category “isn’t really a big deal,” and indeed loses much of its appeal once squared against grim and more relevant statistics.

While the country’s poverty rate fell to 15.5 percent in 2023 from 23.5 percent in 2015, for example, about 28 percent of Filipinos are in danger of falling back to where they came from, according to a separate study by the World Bank.

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“The typical Filipino family earns just enough to stay above the poverty line–but not enough to feel economically secure,” it added.

Income inequality

Social Weather Stations likewise revealed in its first quarter 2026 survey on hunger incidence that more Filipino families experienced involuntary hunger, with the national rate rising to 23.2 percent, the highest since March 2025.

Then there’s the number itself that should give policymakers pause.

For one, the GNI includes income that is generated abroad thus reflecting the significant contribution of remittances sent home by Filipinos living and working abroad and not just the strength of the domestic economy.

It is also entirely possible that the increase in the average per capita income means that the rich have gotten even richer while those at the bottom have actually gotten poorer.

The World Bank indeed revealed in a separate report that the top 1 percent of earners in the Philippines captured a hefty 17 percent of national income, while a smaller 14 percent is shared by the bottom 50 percent, evidence of one of the highest rates of income inequality in the region.

These underscore the point that the Philippines has serious structural economic issues that still need to be resolved if the prosperity indicated by the rise to upper-middle-income status is to be shared and felt by the majority of Filipinos.

‘Not the finish line’

As Ateneo de Manila University Economics professor Leonardo Lanzona Jr. pointed out, many of the weaknesses that have long held back the Philippines’ economic development remain firmly in place.

These include fragmented industrial policies, weak coordination across government agencies, regulatory uncertainty, and persistent barriers to productive investment, not to mention persistent graft and corruption.

It is thus good that the Marcos administration has struck a somber tone while celebrating the achievement, stressing that rising to an upper-middle-income country is “not the finish line,” but rather the beginning of a tougher challenge to sustain gains by easing inflation, boosting consumer and business confidence, protecting jobs and strengthening purchasing power.

The government thus has its work cut out for it to ensure that the reforms and policies that led to the upper-middle-income status will be sustained and strengthened to ensure that the higher status will eventually translate to real benefits that can be seen and felt by the majority of the Filipino people.

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Otherwise, achieving the upper-middle-income status will end up being a hollow victory.