Faced with yawning unemployment and underemployment and a poverty level that is being swiped and covered whenever foreign dignitaries and visitors arrive, the Philippines is far from being in the lower or middle rich country stage. So how much more an Upper Middle Income Country status? Being a UMIC seems to be an obsession of economists in both the government and private sector.
The World Bank currently classifies the Philippines as a lower middle-income country with a GNI (gross national income) per capita of $3,950. This has been the classification of the Philippines since 1987 based on the earliest available data of the World Bank.
For example, China has just recently been elevated to an upper middle income country classification as it has eradicated extreme poverty, but a significant number of people remain vulnerable with incomes below a threshold more typically used to define poverty in upper middle-income countries.
Thailand, with its sustained strong growth and a rapidly modernizing economic has turned it into an upper middle-income country with a strong urban center. Economic success has brought impressive social advancement. Poverty has plummeted while education and health services have considerably expanded and improved.
For as long as there are mouths that are not being fed properly, housing backlogs are not addressed and income disparity abound, what use would an UMIC status bring to our country? Pride of country should not be based on material wealth but on how properly and decently our citizens are able to enjoy quality of life, albeit not the way filthy rich people enjoy, but they are not wanting in anything.
In a recent press briefing, Socioeconomic Planning Secretary Arsenio Balisacan explained that although growth projections have been lowered because of inflation and other factors, this has not set the country far back from its goal of being an upper middle-income country.
He explained that the government’s aim of reducing poverty to single digit levels when President Marcos steps down and becoming an UMIC next year remain achievable despite lower growth targets.
In the Thursday briefing, Balisacan said while the growth target was lowered to 6 to 7 percent this 2024, it will still contribute to poverty reduction and increased incomes in 2025.
The government has aimed for a growth of 6.5 to 7.5 percent and by 2026 to 2028 this growth will be faster at 6.5 to 8 percent, he said.
He said at 6.5 to 7 percent this growth target is still high. “WE still fall within the realm of possibility for our entry to the UMIC class. The threshold of almost $4,500 in GNI per capita should be there, he explained.
The Philippines is still classed as lower middle-income country with a GNI of $1,136 to $4,465 based on 2022 figures, based on the latest classifications of the World Bank released in 2024.A UMIC status has a GNI of $4,468 to $13,845 based on 2022 figures while a high-income country has a GNI of above $13,845 per capita.
Balisacan stressed that a robust macroeconomic fundamental will support this growth trajectory. These growth targets will sustain the country’s position as one of the fastest-growing emerging economies in the Asia Pacific region. At this pace of growth, “we are still on track to reducing poverty incidence from 18.1 percent in 2021 to a single-digit level in 2028,” he added.
He continued: “The WB earlier said better labor market conditions and slower inflation in the country could turn the administration’s single digit poverty incidence aspirations into a reality two years ahead of schedule. “
This was according to the latest Macro Poverty Outlook (MPO) for the Philippines released by the WB on Monday. The WB estimated that poverty incidence in the country could decrease to 9.3 percent in 2026 from 12.2 percent in 2024 and 17.8 percent in 2021, he continued. The World Bank said this was based on the poverty line for lower middle income countries which is pegged at $3.65 per day using 2017 Purchasing Power Parity (PPP), noted the Business Mirror.
The MPO also noted that inflation could also increase due to geopolitical tensions, further trade restrictions and any weakness in agriculture output (which we have been seeing for the past years), and continuingly so.
My take
These aspirations are good, but realizing them depends on variable realities both here and abroad.
Needless to say, growth targets (based on employment, poverty reduction, per capita income, access to food, health, services and infrastructure) would all be meaningless so long as we see beggars on the streets, a severe shortage of houses, particularly for the poor and homeless and children forgoing education because of hunger and deprivation.
So let us not be harping on graduating to UMIC status unless we have completely licked the malaise of our society and people
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