How it feels to be in an
upper middle-income economy
The Philippines is on track to achieving upper-
middle income status by 2025, according to recent
reports from the business media and the business
community. No less than Finance Secretary Benjamin
Diokno expressed confidence that the country will be
recognized as an upper-middle income economy.
The World Bank recently increased the threshold to
be in the upper-middle-income category. For a country
to join the ranks of the upper middle class, its gross
national income (GNI) per capita must at least be
$4,466.
“Yes, by the end of 2025…that’s our goal,” according
to Diokno in public interviews.
The World Bank said that for fiscal year 2024, the
new range of GNI for middle-income countries spans
from $4,466 to $13,845, representing an increase from
the previous band of $4,256 to $13,205. In 2022, the
Philippines’ GNI was reported to be around $3,950.
GNI per capita measures the average earning per
person in a country, representing the total income
divided by the population. This economic indicator is
used to assess economic well-being and living standards.
An average person in a middle-income country earns at
least P223,300 yearly at P50 to USD1 exchange rate.
At the macro level, the country’s GNI looks inspiring
as we are getting closer to the World Bank’s sustainable
development goals of no poverty, zero hunger, good
health and well-being, quality education, gender
equality, clean water and sanitation, affordable and clean
energy, decent work and economic growth, and many
more indicators. Assuming every Filipino earns P223,300
annually, we are close to achieving these goals.
But the reality is that not every Filipino is close to
earning P223,300 a year. The report from the Philippine
Institute of Development Studies (PIDS) shows alarming
statistics. With the poverty line being a household
income of P10,481 per month for a family of five, PIDS
reported that 22% of Filipino households live below the
poverty line. Households earning between P10,481 to
P20,962 are considered the low-income class,
constituting 35% of the population. Together, these two
classes constitute 57% of the population.
The PIDS reported that the lower and upper middle
class earns between P20,962 to P125,772 monthly,
making up 40% of the population. Households that earn
between P125,772 and P209,620 are considered upper
class, and they comprise 2% of the population. Less
than 1%, or some 143,000 families, are considered rich
with a monthly income of P209,620 or more.
So, who enjoys the blessings of being an upper-
middle-income country?
While Filipinos below the poverty line struggle for
food and other basic necessities, and the middle class
absorb the cost of the government’s social interventions
through heavy taxation and other impositions such as
increased SSS and Philhealth contributions, only 1% or
approximately 1.2 million Filipinos splurge into luxury
and truly enjoy the blessings of being an upper middle-
income country.
The rest of the Filipinos, about 99%, still struggle to
overcome extreme pain and adversity.