Philippines just $46 shy of upper-middle-income status

The goal of elevating the Philippines to upper-middle-income status remains in sight for 2026, according to Department of Finance Secretary Frederick Go.

In an interview on Thursday, 18 December, Go said the government’s economic team remains focused on expanding growth while ensuring that Filipinos benefit directly through higher incomes.

“Our goal is to grow the economy, and make sure that the people … are earning at that per capita number,” he said.

An upper-middle-income economy is a classification used by the World Bank based on gross national income (GNI) per capita, or the average income of a country’s residents in a given year. The metric is adjusted using the World Bank’s Atlas method to smooth out exchange-rate fluctuations.

For 2025 to 2026, the World Bank defines an upper-middle-income economy as one with a GNI per capita between $4,516 and $14,005 (P264,598 to P821,693). Latest World Bank data place the Philippines’ GNI per capita at $4,470, or about P261,942.

While this represents a record-high income level for Filipinos, it still falls $46 short — roughly P2,656 per person — of the lower threshold required for upper-middle-income classification.

As a result, the Philippines remains categorized as a lower-middle-income economy, defined by a GNI per capita range of $1,136 to $4,495 (P66,570 to P263,407). Go said exchange rate volatility remains a key obstacle in crossing the threshold by next year.

“One of the problems is, [the World Bank standard] is defined in dollars. So even if we grow in pesos, if the foreign exchange rate works against us, that's the problem,” he said.

The peso has experienced sharp fluctuations in recent weeks, with a strengthening US dollar and political uncertainty linked to the flood control scandal pushing the currency to a record low close of P59.22 per dollar on 9 December.

Despite these headwinds, Go expressed confidence that the country can still meet the World Bank’s income benchmark, stressing that inclusive growth remains central to the Department of Finance’s policy direction.

“Our strategy is to grow the economy and make sure that no one is left behind. Then, when you hurdle that rate, you become an upper-middle-income economy,” he said.

The holiday season typically brings an increase in remittances from overseas Filipino workers, which can provide some support to the peso. In addition, the Bangko Sentral ng Pilipinas recently cut its key policy rate just days after the peso hit its record low — a move aimed at stimulating economic growth in 2026.