PH will receive UMIC status in 2025

The Philippines has a good chance of achieving upper-middle-income country status next year if economic growth targets are met, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said Friday.

“We have a good chance of achieving UMIC status in 2025,” Balisacan said during a year-end briefing held at the NEDA office in Mandaluyong City.

The World Bank defines lower-middle-income countries as those with a gross national income (GNI) per capita ranging from US$4,516 to US$14,005 in fiscal year 2025.

GNI per capita measures economic output per citizen, including both domestic and international partners.

At the end of 2023, the Philippines’ GNI per capita was $4,230.

To achieve UMIC status, Balisacan said the country needs to achieve its growth target this year and maintain its growth trajectory in 2025.

He also noted the need for a significant weakening of the peso against the currencies of the country’s trading partners.

Balisacan is optimistic that the lower end of the government’s 6 percent growth target will still be achieved this year.

The Philippines’ economic growth averaged 5.8 percent in the first three quarters of 2024.

“We continue to be optimistic about the fourth quarter’s economic performance. Holiday spending, more stable commodity prices, as well as robust remittance inflows and the labor market give us confidence that our growth target of 6.0 to 7.0 percent is still achievable,” Balisacan said.

Balisacan, however, noted that a series of typhoons that have hit the country in recent months have affected the agricultural sector.

“On the other hand, positive forces may outweigh these developments in the agricultural sector,” he said.

Balisacan said the Bangko Sentral ng Pilipinas’ decision to cut policy rates by a total of 50 basis points and lower reserve requirements is expected to boost private spending, especially on high-value consumer goods and capital-intensive infrastructure investments in the coming quarters. .

“This move will support economic growth by making borrowing more affordable for businesses and consumers,” he said.

Reducing inflation, maintaining a strong labor market and continued growth in remittances will also help boost economic growth, he said.

Balisacan said the government’s goal of reducing the national poverty rate from 15.5 percent in 2023 to single digits by 2028 also remains achievable.

“Keeping prices low and stable is critical to reducing poverty and achieving more inclusive economic growth,” he said.

“We will continue to improve our social protection programs, especially through the digital solutions provided by the National Identity Card, to protect our gains and ensure that no one is left behind,” Balisacan added.

Balisacan, meanwhile, said external risks to growth include geopolitical tensions, major power rivalry and uncertainty arising from political-economic dynamics within and between the country’s major trading partners such as the United States.

“With the upcoming inauguration of US President-elect Trump, we affirm that the Philippines is ready to work with any economy and adjust our policies accordingly as we continually build strong and close relationships with the US and other countries,” he said. said.