Philippines’ UMIC label: A prosperity mirage?
Before we start celebrating and patting ourselves on the back, what, in fact, is the reality on the ground?
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Before we start celebrating and patting ourselves on the back, what, in fact, is the reality on the ground?
The Philippines today stands proudly in the World Bank’s ledger because it has just been declared by the bank to be in the category of an Upper Middle-Income Country (UMIC) as of 1 July 2026 after our Gross National Income (GNI) reached $4,850, slightly exceeding the $4,636 threshold.
I certainly am no economist but to a layman, this label sounds very impressive and seems to suggest that our people are now more prosperous because the country’s per capita income level is up. It seems to imply that given the upgrade, our stock market should be going gangbusters. And investors should be flocking in.
Our exchange rate should be stable because inflation is being soundly managed by our monetary authorities. Above all, shouldn’t this suggest that our economic fundamentals are sound? So hip hip hooray, our policy makers and government economic planners proclaim!
But hold on, before we start celebrating and patting ourselves on the back, what in fact is the reality on the ground? Is this newfound prosperity just a mirage because the opposite seems to be the case. Since the proclamation, a bunch of articles have been published reacting to the apparent disconnect of our supposed prosperity with what most of us — except for the wealthy, the privileged few — are actually experiencing.
The most biting criticism comes from AnakPawis, a partylist representing the downtrodden, the underprivileged, the peasants, labor, and the ordinary workers who bear the brunt of everyday living. Granted, this partylist is left-leaning and has been traditionally critical of anything and everything about our democratic society; the truth is, even without looking at the statistics, our people are still very much hurting.
AnakPawis president Ariel Castillo recently remarked, “Wala dapat ipagdiwang sa klasipikasyon ng World Bank sa bansa. Dahil sa mga maralitang sadlak, wala itong kabuluhan at hindi sumasalamin sa tunay na kalagayan ng mayorya ng mamamayan.” Loosely translated: all this noisy hurrah does not mirror the reality of the majority of the people.
You can see this everyday. Gasoline and power prices are out of whack. Food and grocery bills are higher. You’re taking home a lot less goods and food now from the “palengke” and supermarket for the same amount of money that you used to spend. Medicine prices, forget about it and just keep your fingers crossed you don’t get sick. Thousands have to wade through flooded streets to reach their offices and homes at the slight hint of a storm notwithstanding grandiose claims of completed flood control infrastructure. IBON Foundation, a non-profit, non-political socio-economic advocacy research group focusing on the grassroots, backs the view of AnakPawis. About a third of our people, or some 77 million, are considered to be in the lower and middle income groups while about a third of these are at the poverty level. The latter category means barely scraping together a meal, at most perhaps two, a day with no sustainable means to enable adequate shelter, health, and education.
Furthermore, IBON notes that our UMIC status may erroneously imply that the average annual income of a Filipino household is about P1.2 million. In fact, only five percent of the richest families earn that much with another three percent in the category of the upper middle class in the same income category.
Another telling mirage is the state of our capital market which theoretically should be the mirror image of our economy. Our stock market is barely hovering above the 6,000 PSE index level from its high of about 7,400 in 2024. The average daily trading volume is about $120 million to $140 million compared to the latest investors’ darling Vietnam’s average daily volume of $1.1 billion.
Foreign funds in the stock market have been net sellers the first four months of 2026, with a whopping total of $4.41 billion, reversing a net inflow of $923 million for the same period in 2025, suggesting that we are viewed with jaundiced eyes by the international market. We only have 280 listed firms, with more reported firms delisting or cancelling plans to list compared to Vietnam’s 700-plus listed firms.
So given all of the above, is our Upper Middle Income Country status merely a mirage of prosperity? Yes, I think most definitely it is a mirage. I have to candidly admit that I believe we have a long way to go and a lot of work to do, buttressed by a good dose of optimism and prayers, to truly achieve as a nation Upper Middle-Income Country status.
Until next week… OBF!
