The Philippines' ascent to upper-middle-income status presents a significant opportunity to maximize its economic potential, according to Juan Paolo Colet, managing director at China Banking Corp. (Chinabank).

In an exclusive message to DAILY TRIBUNE, Colet said the World Bank's reclassification is a milestone for the country but stressed that further reforms are needed to ensure that higher gross national income (GNI) translates into broader and more equitable prosperity.

“The milestone is good news because it reflects years of steady economic expansion and points to the resilience of our growth story. However, the fact that Vietnam has pulled ahead highlights the extent to which we have yet to fully capitalize on our economic potential,” he said.

Vietnam was among the countries elevated to upper-middle-income status by the World Bank alongside the Philippines. In recent years, it has emerged as one of the world's leading manufacturing and export hubs, benefiting from strong foreign investment, supply-chain diversification away from China, and a growing domestic market. It is now among the fastest-growing economies in Southeast Asia.

The Philippines, meanwhile, has experienced a slowdown in growth, with the economy expanding at a weaker pace over the past three quarters following the outbreak of the flood control scandal in the second half of last year. Data from the World Inequality Database also showed that in 2024, the top 10 percent of income earners accounted for 45.4 percent of total income, while the bottom 50 percent accounted for just 14.3 percent, underscoring persistent income inequality.

The World Bank uses GNI per capita as the basis for its income classifications. However, economists have argued that the measure reflects average income rather than the distribution of wealth across the population.

Colet said reforms remain necessary to make the country's new income status more meaningful.

“First, accelerating sustainable growth through broader industrial development and investment-led expansion; and second, ensuring that the benefits of growth are more widely shared, translating into higher incomes, better jobs, and improved living standards for a larger segment of the population,” he said.

Economy, Planning, and Development Secretary Arsenio Balisacan likewise acknowledged the country's income disparities.

“We acknowledge that income disparities persist, and many continue to face economic difficulties. Our priority is to ensure that growth becomes more inclusive and that its benefits reach all Filipinos,” Balisacan said in a statement on Thursday.