PH needs productive investments, AI
The Philippines will need to make its investments more productive and harness artificial intelligence (AI) to sustain its progress beyond upper-middle income country (Umic) status, according to the World Bank,
Zafer Mustafaoğlu, the bank’s division director for the Philippines, said that simply accumulating more capital will no longer be enough to guarantee progress especially as peers are advancing rapidly.
“Investment helped bring the Philippines to upper-middle income status, and investment will remain essential. But sustaining convergence will increasingly depend on making investment more productive,” Mustafaoğlu said at the 64th Philippine Economic Society Annual Meeting and Conference.
“The Philippines economy will need faster diffusion of technology and know-how across firms, a more skilled workforce, and progressively a stronger capacity to innovate. The common feature of successful convergence is not simply more capital. It is sustained improvement in the efficiency with which capital, labor, and knowledge are combined,” he added.
Last July, the World Bank classified the Philippines as an upper-middle income economy after its gross national income per capita reached $4,850 in 2025, up from $4,470 a year earlier. The latest readout was above the bank’s $4,636 threshold for upper-middle income status.
The reclassification marked a significant milestone for the Philippines, which had remained a lower-middle income economy since 1987.
Mustafaoğlu said faster adoption of existing technologies, including AI, could help lift productivity, noting that while the Philippines had expanded digital access, it had yet to fully translate this into productive capacity.
