OUR recent though somewhat belated entry to upper-middle-income status is good albeit overdue. Again, this has been to our politicians and commentating class a divisive indicator not on what we have or have not achieved but on our tribal politics. The anti-administration types describe it as meaningless and misleading while the pro-administration hail it as a sign of our relentless march to progress under their leadership.
The former bring up all the shortcomings and describe the progress as illusory. Yet, the negative now but pro-PNoy then among them were fawning uncontrollably when we were upgraded to investment grade. One would think it was solely the work of that administration and not the cumulative work of all administrations since 1986, albeit with some more deserving than others. Much of the credit for both upgrades goes to the overseas Filipino workers (OFWs) whose effort and personal sacrifice to live away from their families to support them made it happen. By contrast, the overenthusiastic supporters of this administration go beyond what the president and his official family are responsibly claiming the benefits are. Same is true here, it is a cumulative effort.
What is the difference between the two views? Which tribe they belong to. Talk about the glass being half-empty or full. To them, it is who is pouring or drinking from the glass that determines one’s view. Scant reason or logic, just a conclusion that one backs into based on which jefe you are loyal to. It is amusing if not so predictable and pathetic. Do the same for both sides. What’s the difference between the opposing mirror images? Just which political tribe they are loyal to.
What does the upgrade to middle-income status mean? First, it is good, just as being upgraded to investment grade was good. No buts, they are both good. There is some downside to no longer being eligible for concessional loans after a two-year adjustment period, but shouldn’t an investment grade and upper-middle-income country not have to rely on that? Some investors have criteria on being investment grade and income level, so it helps as well. It also denotes a market and economy per capita of a certain level. It may have taken longer than it should but at least we are at that level. The upgrade is not everything or a panacea. GNI does not measure income distribution, poverty levels or the quality of the economy. How we got there and whether we go further and build on it are more important. Context is critical, too. Also important, what does this upgrade mean and why did it take so long?
What upper middle income means is that we have reached a gross national income (GNI) of over $4,636 per capita. We exceeded that in 2025 and ended the year at $4,850. Vietnam is at $4,970. Thailand is at $7,690, Indonesia at $4,910 and Malaysia at $11,670. The gap is much worse if one uses purchasing power parity which means what it can actually buy given costs with our much higher food, transportation and utility prices. Purchasing power parity means that what you can buy compared to if you bought the same basket of goods a dollar could purchase on average in the US. For the Philippines, our $4,850 equals $13,800 in the US. Given their lower food, transportation and utility prices, Vietnam’s $4,970 equals $16,800. This is a very big deal as it means your money goes about 20 percent further in Vietnam than it does in the Philippines despite our nearly equal GNI. We will be at upper-middle-income level for a long time as to be considered high income, which today is $14,375 (and not using PPP). Unless we regress, and I hope we don’t, or grow below the level needed to maintain this level. Unlikely though.
What got us here is almost constant GNI growth at various levels since 1986. Short exceptions are 2009 when we barely escaped a recession unlike all our neighbors and give credit where it was deserved to the skillful economic management of president Gloria Macapagal Arroyo, secretary Margarito Teves and BSP governor Amando Tetangco Jr. after the late 2008 global recession which was very severe. And our contraction which was worse than our neighbors during Covid-19. Then services shut down and manufacturing stayed. Explains our underperformance given our services and remittance, and near manufacturing-free economy. That is why we grew slower compared to our major Asean neighbors and took longer to get to this level. Even the only-in-the-21st-century growth story Vietnam got there in less time than us. Decent performance for us over the last 40 years but relative underperformance. Why did it take so long compared to our neighbors? This is primarily due to two reasons.
Imbalanced growth dependent on services and remittances. GNI is not GDP (gross domestic product) which for us is $4,443 so the roughly 10-percent increase between GNI and GDP is due to the earnings and income of overseas Filipinos as GNI includes income from Filipinos outside the Philippines. OFWs and their remittances were the difference to becoming upper middle income. Most of our neighbors have more robust manufacturing and industry, and that has a multiplier effect. Also, less of a disparity between GNI and GDP. The number of jobs and economic activity that manufacturing brings, which is about four to six additional jobs for each new manufacturing job. Services and remittances do not provide that. Note the measure is not absolute GNI but GNI per capita, hence the effect of population. Our very high and world leading population growth, which was maintained until very recently, also made it harder to grow given the additional mouths to feed, educate and employ. When I was born in 1959, there were less than 20 million Filipinos. We will be 120 million shortly. With that and without meaningful manufacturing jobs it has been hard to find domestic employment to keep pace. Hence, the temporary expedient of overseas workers in the 1970s turned into a necessity.
How do we start the long and necessary move to sustained economic growth in line with our neighbors? Wise industrial policy leading to more manufacturing, food security, quality education and moderate population growth. Congratulations on finally becoming upper middle income, but the hard work is ahead of us. I know it is hard, challenging and demands more from our government and private sector than we have seen. Not easy but we have no choice. We better succeed if we want to prosper and stop our relative underperformance. We need broad and comprehensive thinking, planning and execution. It also means this goal and path needs to be depoliticized and carried on over decades rather than per administration.
The author is an independent director of the state-run Maharlika Investment Corp.
The former bring up all the shortcomings and describe the progress as illusory. Yet, the negative now but pro-PNoy then among them were fawning uncontrollably when we were upgraded to investment grade. One would think it was solely the work of that administration and not the cumulative work of all administrations since 1986, albeit with some more deserving than others. Much of the credit for both upgrades goes to the overseas Filipino workers (OFWs) whose effort and personal sacrifice to live away from their families to support them made it happen. By contrast, the overenthusiastic supporters of this administration go beyond what the president and his official family are responsibly claiming the benefits are. Same is true here, it is a cumulative effort.
What is the difference between the two views? Which tribe they belong to. Talk about the glass being half-empty or full. To them, it is who is pouring or drinking from the glass that determines one’s view. Scant reason or logic, just a conclusion that one backs into based on which jefe you are loyal to. It is amusing if not so predictable and pathetic. Do the same for both sides. What’s the difference between the opposing mirror images? Just which political tribe they are loyal to.
What does the upgrade to middle-income status mean? First, it is good, just as being upgraded to investment grade was good. No buts, they are both good. There is some downside to no longer being eligible for concessional loans after a two-year adjustment period, but shouldn’t an investment grade and upper-middle-income country not have to rely on that? Some investors have criteria on being investment grade and income level, so it helps as well. It also denotes a market and economy per capita of a certain level. It may have taken longer than it should but at least we are at that level. The upgrade is not everything or a panacea. GNI does not measure income distribution, poverty levels or the quality of the economy. How we got there and whether we go further and build on it are more important. Context is critical, too. Also important, what does this upgrade mean and why did it take so long?
What upper middle income means is that we have reached a gross national income (GNI) of over $4,636 per capita. We exceeded that in 2025 and ended the year at $4,850. Vietnam is at $4,970. Thailand is at $7,690, Indonesia at $4,910 and Malaysia at $11,670. The gap is much worse if one uses purchasing power parity which means what it can actually buy given costs with our much higher food, transportation and utility prices. Purchasing power parity means that what you can buy compared to if you bought the same basket of goods a dollar could purchase on average in the US. For the Philippines, our $4,850 equals $13,800 in the US. Given their lower food, transportation and utility prices, Vietnam’s $4,970 equals $16,800. This is a very big deal as it means your money goes about 20 percent further in Vietnam than it does in the Philippines despite our nearly equal GNI. We will be at upper-middle-income level for a long time as to be considered high income, which today is $14,375 (and not using PPP). Unless we regress, and I hope we don’t, or grow below the level needed to maintain this level. Unlikely though.
What got us here is almost constant GNI growth at various levels since 1986. Short exceptions are 2009 when we barely escaped a recession unlike all our neighbors and give credit where it was deserved to the skillful economic management of president Gloria Macapagal Arroyo, secretary Margarito Teves and BSP governor Amando Tetangco Jr. after the late 2008 global recession which was very severe. And our contraction which was worse than our neighbors during Covid-19. Then services shut down and manufacturing stayed. Explains our underperformance given our services and remittance, and near manufacturing-free economy. That is why we grew slower compared to our major Asean neighbors and took longer to get to this level. Even the only-in-the-21st-century growth story Vietnam got there in less time than us. Decent performance for us over the last 40 years but relative underperformance. Why did it take so long compared to our neighbors? This is primarily due to two reasons.
Imbalanced growth dependent on services and remittances. GNI is not GDP (gross domestic product) which for us is $4,443 so the roughly 10-percent increase between GNI and GDP is due to the earnings and income of overseas Filipinos as GNI includes income from Filipinos outside the Philippines. OFWs and their remittances were the difference to becoming upper middle income. Most of our neighbors have more robust manufacturing and industry, and that has a multiplier effect. Also, less of a disparity between GNI and GDP. The number of jobs and economic activity that manufacturing brings, which is about four to six additional jobs for each new manufacturing job. Services and remittances do not provide that. Note the measure is not absolute GNI but GNI per capita, hence the effect of population. Our very high and world leading population growth, which was maintained until very recently, also made it harder to grow given the additional mouths to feed, educate and employ. When I was born in 1959, there were less than 20 million Filipinos. We will be 120 million shortly. With that and without meaningful manufacturing jobs it has been hard to find domestic employment to keep pace. Hence, the temporary expedient of overseas workers in the 1970s turned into a necessity.
How do we start the long and necessary move to sustained economic growth in line with our neighbors? Wise industrial policy leading to more manufacturing, food security, quality education and moderate population growth. Congratulations on finally becoming upper middle income, but the hard work is ahead of us. I know it is hard, challenging and demands more from our government and private sector than we have seen. Not easy but we have no choice. We better succeed if we want to prosper and stop our relative underperformance. We need broad and comprehensive thinking, planning and execution. It also means this goal and path needs to be depoliticized and carried on over decades rather than per administration.
The author is an independent director of the state-run Maharlika Investment Corp.
