Inclusive growth: Legarda seeks real impact of upper middle-income status

MANILA, Philippines – Senator Loren Legarda has filed Resolution No. 505 directing the Senate to conduct an inquiry in aid of legislation on the Philippines’ recent reclassification as an Upper Middle-Income Country (UMIC) by the World Bank.

The resolution calls for a deeper examination of how this long-delayed economic milestone can be transformed into genuine social progress, ensuring that prosperity on paper is matched by dignity, opportunity, and security in the daily lives of Filipinos.

Effective July 1, 2026, the World Bank elevated the Philippines to UMIC status after the country posted a Gross National Income (GNI) per capita of $4,850 in 2025, surpassing the threshold of $4,636.

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The resolution notes that the Philippines had remained a lower-middle-income country since 1987, taking nearly 39 years to advance to the next tier. By contrast, Vietnam entered the lower-middle-income bracket only in 2009 and surged to UMIC in 2026—a leap of just 17 years driven by robust export-led manufacturing and strong foreign direct investment.

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The Philippines’ growth, meanwhile, remains heavily reliant on overseas remittances, which accounted for 8.7 percent of GDP in 2024, the highest in ASEAN compared to Thailand at 1.8 percent, Indonesia at 1.15 percent, and Malaysia at 0.38 percent.

The resolution further points to systemic challenges that continue to hinder inclusive growth. The Philippines scored only 32 out of 100 in the 2025 Corruption Perceptions Index, trailing regional counterparts and deterring foreign investment. Poverty incidence was approximately 15.5 percent as of 2023, while a 2026 study by the Philippine Institute for Development Studies (PIDS) found that 30 percent of households remain highly vulnerable to slipping back into poverty due to economic shocks.

Underemployment was at 11.9 percent in 2025, reflecting the prevalence of precarious, low-paying jobs. Wealth inequality persisted, with the richest 20 percent commanding nearly half of national income while the poorest 20 percent survived on just 5 to 6 percent. The country also ranked sixth lowest in East and Southeast Asia in the 2026 Good Life Index, exposing deficiencies in healthcare, safety, and social support.

READ: IMF, ADB slash PH growth forecast

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Legarda emphasized that the achievement must be received with humility and responsibility, recognizing the decades of sacrifice by Filipino workers, overseas Filipinos, farmers, fisherfolk, entrepreneurs, taxpayers, and public servants.

“Hindi ito tagumpay ng isang administrasyon lamang. Ito ay bunga ng pawis, sakripisyo, at tibay ng loob ng mga manggagawa, magsasaka, mangingisda, propesyunal, at mga Pilipinong nagtaguyod ng bansa sa loob ng maraming dekada. Ang tunay na sukatan ng kaunlaran ay kung mararamdaman ng bawat pamilya ang ginhawa sa kanilang araw-araw na pamumuhay, hindi lamang sa mga numero ng ekonomiya,” Legarda said.

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The resolution underscores that UMIC status must not be treated as proof that ordinary Filipinos already live middle-class lives.

“Hindi sapat ang bagong tatak na Upper Middle-Income Country kung ang karaniwang Pilipino ay patuloy na nahihirapan sa mababang sahod, kulang na serbisyong panlipunan, at hindi pantay na oportunidad. Ang hamon sa pamahalaan ay gawing inklusibo ang paglago, na ang bawat Pilipino, lalo na ang nasa laylayan, ay may marangal na trabaho, maayos na kalusugan, at patas na bahagi sa kaunlaran. Ang bagong katayuan ng bansa ay dapat maging simula ng mas malalim na reporma, hindi pagtatapos ng laban,” Legarda said.

Resolution No. 505 directs the Department of Economy, Planning, and Development (DEPDev), in coordination with the Department of Finance (DOF) and other agencies, to submit a comprehensive report on the implications of UMIC status.

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This includes policy measures to sustain the classification, strategies to ensure benefits are felt across all sectors, expected impact on concessional financing, official development assistance, grants, and loan terms, effects on sovereign borrowing, credit perception, fiscal space, and public investment planning, risks and trade-offs from reduced eligibility for concessional financing, laws and programs that may require review or recalibration, and a medium- and long-term game plan to convert the milestone into inclusive growth, poverty reduction, decent employment, stronger domestic productivity, and improved public services.