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Skyline and buildings in Quezon City on January 11, 2023. Mark Demayo, ABS-CBN News

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Jekki Pascual

ABS-CBN News

MANILA — The Philippines&#x27; entry into the ranks of upper middle income economies is not likely to happen this year or next year, according to the World Bank.The global financial institution said the country may likely graduate from the lower middle income status by 2027 and not 2025 or 2026 which was earlier targeted by the Philippine government.World Bank Lead Economist Gonzalo Varela said though 2026 is still possible, global uncertainties may push back the Philippines’ goal to hit upper middle income status.“We are thinking that a probable outcome is that it happens around 2027,” Varela told reporters during the Philippine Economic briefing.The World Bank sees the country growing 5.3 percent this 2025. This is lower than the country’s 5.6 percent GDP in 2024 and far from government’s target range of 6 to 8 percent.The global lending body attributes this to mostly external factors such as trade uncertainties like the US tariff policy, and geopolitical risks.“Due to global policy uncertainty, the impact of what’s happening externally that has resulted in exports doing less well, services growth decelerating, industry decelerating. It’s all of that helps to explain why growth is not hitting our aspirational targets,” said Jaffar Al-Rikabi, World Bank Senior Country Economist.The World Bank has not yet included in the forecasts the recent tension between Israel and Iran, but said if that escalates further, that could also affect the Philippines and global trade.“They could result in elevated commodity prices. They could impact global shipping, logistics, and the broader economy,” Al-Rikabi said.The World Bank recommends that the Philippines implement tax reforms, improve efficiency of expenditure, and lower deficits. It added the country should invest in infrastructure foundation necessary for jobs, streamline business regulations, and mobilize private capital.The bank also urges the country to continue pushing for regional trade agreements like free trade deals to protect itself from rapidly changing trade polices globally.“The increase in global uncertainty, increased trade barriers globally is an opportunity for the Philippines to focus on doubling down domestic reforms, reducing the cost of doing business in the economy, reducing trade costs, and advancing on the agenda of regional trade agreements,” Varela said.Despite a slower forecast, the Philippines&#x27; 5.3 percent growth projection is still among the fastest in Southeast Asia. Vietnam has a 5.8 percent growth forecast, while Indonesia has 4.7 percent, Cambodia 4 percent, Malaysia 3.9 percent, Lao PDR 3.5 percent, Thailand 1.8 percent, and Myanmar -2.5 percent.

The World Bank forecasts a delay in the Philippines entry into the ranks of upper middle income economies.

The World Bank forecasts a delay in the Philippines entry into the ranks of upper middle income economies.

Philippines' rise to upper middle income ranks likely delayed to 2027: World Bank

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Philippines' rise to upper middle income ranks likely delayed to 2027: World Bank

Jekki Pascual,

ABS-CBN News

Published Jun 19, 2025 05:33 PM PHT

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