Making Upper Middle-Income status matter
If the Philippines truly wants this new economic status to have meaning, the benefits of growth must become more inclusive.
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Daily TribuneIf the Philippines truly wants this new economic status to have meaning, the benefits of growth must become more inclusive.
The recent announcement that the Philippines has been classified by the World Bank as an Upper Middle-Income Economy is undoubtedly a milestone worth recognizing. It reflects years of economic growth, increasing national income, and the resilience of the Filipino people despite numerous challenges — from the pandemic to global inflation and geopolitical uncertainties.
The World Bank classifies countries according to their gross national income (GNI) per capita.
By surpassing the required threshold, the Philippines joins the ranks of nations considered to have reached a higher stage of economic development. This recognition sends a positive signal to investors, development partners, and the international business community that the country’s economy continues to move in the right direction.
But while economists and the government may celebrate the statistics, many Filipinos are asking a more practical question: “Will my life become better because of this new classification?”
That is the challenge facing the government.
Economic classifications do not automatically translate into better living standards. A higher national income does not necessarily mean that every Filipino enjoys a higher income or an improved quality of life.
Many families continue to struggle with rising food prices, high electricity costs (I was surprised by our electric bill last month despite having a solar power system), increasing transportation costs, and the ever-growing expenses associated with education and healthcare.
Perhaps the group that feels the greatest burden is the country’s middle-income earners.
Ironically, they often receive the least government assistance. They faithfully pay their taxes but are frequently ineligible for subsidies designed for poorer sectors. At the same time, inflation steadily erodes their purchasing power, making it increasingly difficult to save, invest and provide a better future for their families.
If the Philippines truly wants this new economic status to have meaning, the benefits of growth must become more inclusive.
The government should continue investing heavily in infrastructure that reduces logistics costs, expands digital connectivity, and improves transportation systems. These investments generate employment while making businesses more competitive.
Equally important is investing in people. Better public education, accessible healthcare, continuous skills development, and stronger support for innovation will prepare Filipinos for higher-paying jobs in an increasingly technology-driven global economy.
The country must also strengthen support for micro, small and medium enterprises, which generate the majority of employment. Easier access to financing, simplified regulations and programs that promote innovation and intellectual property protection will allow more Filipino businesses to grow, compete internationally and create quality jobs.
Tax policies likewise deserve careful review. Middle-income workers should feel that their hard work is rewarded through fair taxation, efficient public services, and opportunities to build wealth rather than merely coping with rising living costs.
On point is the recommendation of TaxWhiz Mon Abrea, a good friend, to increase the income tax exemption to P1 million. This would be a big help to middle-income earners by increasing their take-home pay.
Most importantly, the government must curb corruption and immediately file cases against all those involved in the flood control controversy.
Ultimately, economic progress should not be measured solely by international classifications or impressive macroeconomic indicators. Success is best reflected when families can comfortably afford decent housing, quality education, nutritious food, reliable healthcare, and have meaningful employment without constant financial anxiety.
The World Bank’s recognition is certainly a welcome achievement. But it should be viewed not as the finish line but as the beginning of a greater responsibility.
The true measure of an upper middle-income economy is not what appears in statistical reports but what every Filipino experiences in daily life. Only then can this milestone become more than a label — it becomes genuine progress shared by all, where there are no more poor Filipinos.
