Within next year, the Marcos administration says most Filipinos will likely experience higher incomes and ultimately a better quality of living as the Philippines upgrades into an upper middle-income country.

Economists and financial leaders agree, stressing sustained robust household consumption of goods and services among Filipinos despite some periods of high inflation this year.

However, to catapult the nation to a higher economic status, they urge the government to accelerate effective programs on education, financial literacy, healthcare, and agriculture.

“It’s about time that — even though late — we’re going to have our golden age and there’s a possibility that we start that with the Marcos administration,” University of Asia and the Pacific economics professor Dr. Bernardo Villegas said.

According to the World Bank, an upper middle-income country has a gross national income (GNI) per capita of $4,466 to $13,845. The Philippines reached $4,320 last year, further up from $3,350 in 2020.

GNI per capita indicates the average income of the citizens, reflecting both investments and incomes from domestic and external sources.

Most telling indicator

Aside from GNI per capita, the Philippine Statistics Authority reported the country’s poverty incidence dropped to 15.5 percent last year from 18.1 percent in 2021 and 16.7 percent in 2018.

This means 2.45 million Filipinos were lifted out of poverty, obtaining an income of at least P13,873 per month to support the basic needs of a five-member household.

“Despite household budgets getting tighter, consumers are, interestingly, reallocating their spending from essentials, such as food and clothing, to restaurants and other miscellaneous goods services, even as prices have climbed,” HSBC economist Aris Dacanay said.

“This is a testament that tastes and preferences change, more so with the Philippines being inches away from becoming an upper-middle income economy,” he continued.

Focus areas

Villegas said the government and the private sector must work double-time to pull down the poverty rate to 9 percent or better through widespread financial literacy programs which can encourage more Filipinos to set funds for productive or income-generating assets and protection of assets.

“Filipinos are poor savers with a savings rate of 9 percent. In other parts of the world, the savings rate is 25 to 45 percent,” he cautioned.

Villegas added the government must attract investments in agriculture to raise the incomes of farmers, the poorest group in the country, and increase national income from exports.

“We have to undo the harm done by the agrarian reform by finding creative ways of consolidating them through cooperatives. And like in Malaysia, businesses ask farmers to lease their land to manage the units of farms to grow them at a faster rate,” he said.

The International Monetary Fund also recommended that the government invest in affordable education and up-to-date workers’ education to boost production activities and economic output.

“Additional efforts should center on upskilling the labor force, and enhancing the capacity of the local government units. Revenue mobilization remains critical to sustain a credible medium-term fiscal consolidation strategy, rebuild buffers, and create space for poverty reduction efforts,” IMF Deputy Division Chief Elif Arbatli Saxegaard said.

With accessible and better healthcare and educational services, the IMF said the households can expand funds to investments by about 18 percent or bigger.