Higher income country status
In a recent business forum attended by local and foreign business executives, Executive Secretary Ralph Recto said the Philippines is close to reaching upper middle-income country (UMIC) status this year.
Recall that a similar forecast was earlier made by then Socioeconomic Development Secretary Arsenio Balisacan, which he projected to happen by 2026 or late 2025 using the same data cited by Recto.
Under World Bank standards, a country is considered upper middle income if its gross national income (GNI) per capita is not less than $4.496. According to Recto, the country’s GNI per capita in 2024 was $4,470, which is just short by $26 of the threshold.
This year, among the Association of Southeast Asian Nations-member countries, only Thailand and Malaysia are in that income bracket, with the Philippines and Vietnam classified as lower middle income.
From the standpoint of international economists and investment advisors, the close proximity of the Philippines to UMIC status is welcome news in light of the still-hanging flood control projects scandal and political disagreement between the two highest officials of the land.
The UMIC status gives, among others, the impression that a country’s economic fundamentals are strong and meet the criteria that foreign investors take into consideration when they look for sites that can assure favorable returns on their investments.
The “pat on the back” that accompanied that income status report is no different from what happened in the past when the country, then under different administrations, received close to investment grade rating from several international credit ratings agencies.
Those ratings meant that the country would be able to secure loans from international credit institutions at lower interest rates and more favorable repayment terms.
The proceeds from the loans can then be used to fund projects that can enhance economic development and productivity in all sectors of society.
The credit ratings upgrade was promoted by the national leadership then as a significant contribution to the improvement of the country’s economy that would result in the lowering of the inflation rate and making goods and services more affordable to the majority of Filipinos.
As things turned out later, the near investment-grade rating was good optics for the international financial community, but it hardly made a difference to the daily life of the country’s 99 percent at that time.
And that was not surprising because the investment upgrade would redound to the benefit of the people only over the years, in conjunction with the proper government measures.
Sadly, it instead became a source of frustration and dissatisfaction that were expressed by the voters in the succeeding presidential elections.
To hear, once more, that the Philippines is near UMIC status is good news. It’s an objective that the country has been trying to accomplish for decades, but has been unable to do so for reasons attributable to long-standing economic and political issues.
There is no need to present “an almost there” posture and give it a lot of significance, as it may, in the process, raise false hopes that would later fall flat for various reasons.
A lot of things in the economic and political scenes still have to be done (and fast) for the country to reach that status before the present administration takes leave in 2028.
As shown in the past, there is no assurance that the incoming administration would continue the economic measures that its predecessor had started. Unless the new administration is politically aligned with the outgoing administration, the former is expected to have its own agenda on how, if at all, to reach UMIC status for the country.
As the Nike sports shoe logo puts it—just do it. Do what has to be done to accomplish that objective and let the result speak for themselves.
For comments, please send your email to raul.palabrica@inquirer.net
