PH an upper middle income nation: What it means for Cebu’s economy
The Cebu-Cordova Link Expressway (CCLEX) (Photo courtesy of Cebu-Cordova Link Expressway Corp. )CEBU CITY, Philippines– The Philippines’ elevation to the World Bank’s upper-middle-income category is a. . .
The Cebu-Cordova Link Expressway (CCLEX) (Photo courtesy of Cebu-Cordova Link Expressway Corp. )CEBU CITY, Philippines– The Philippines’ elevation to the World Bank’s upper-middle-income category is a significant milestone. But an economist cautions that the real test lies ahead, particularly for trade-reliant economies like Cebu. The country’s new status as an upper-middle-income nation is a milestone worth celebrating. However, according to Fernando “Perry” Fajardo, it should not become a reason for complacency. “The goal is not merely to cross an international income threshold; the goal is to build an economy where every Filipino family experiences improved living standards,” Fajardo said. ‘Middle income trap’The reclassification reflects real gains, including decades of economic growth, expansion of the services sector, rising remittances, stronger domestic consumption, and improvements in investment and infrastructure. But the country—and Cebu, for that matter—must convert that growth into higher productivity, better-paying jobs, and stronger industries, Fajardo pointed out. READ MORE:World Bank: PH now an upper-middle income countryOtherwise, the Philippines could get stuck in the “middle-income trap. ”“The journey from lower-middle income to upper-middle income is significant,” Fajardo said. “The journey from upper-middle income to a high-income economy will require deeper reforms, greater competitiveness, and a renewed commitment to inclusive development. ”StrategiesTo avoid the “middle-income trap,” Fajardo recommended accelerating industrialization by expanding manufacturing, modernizing agriculture, and investing in electronics, renewable energy, and other higher-value industries. This would enable the Philippines to move beyond its dependence on consumption, remittances, and the services sector. Likewise, the country should improve productivity. READ MORE:World Bank sees PH economy growing 6% this yearEconomic growth must translate into higher wages, Fajardo said, which requires better education, stronger technical skills, innovation, digital transformation, and more efficient infrastructure. The economist also called for reducing inequality, emphasizing that economic growth should be felt in communities outside Metro Manila and other major urban centers. Furthermore, the Philippines needs to strengthen its institutions. “Sustainable progress requires good governance, transparent public spending, effective regulation, and long-term policy consistency,” Fajardo said. Income groupsAn upper-middle-income country is a classification used by the World Bank for nations with a Gross National Income (GNI) per capita of between $4,636 and $14,375 (roughly ₱285,600 to ₱885,700 at current exchange rates). The World Bank classifies economies into four income groups based on GNI per capita: low income ($1,175 or less), lower-middle income ($1,176 to $4,635), upper-middle income ($4,636 to $14,375), and high income (more than $14,375). The Philippines now joins countries such as China, Malaysia, and South Africa in the upper-middle-income category. The World Bank updates these classifications annually to assess economic development and guide resource allocation, including access to concessional foreign aid and low-interest loans. Such financing generally becomes less available as a country’s average income rises because it is considered more capable of financing its own development. READ MORE:High mid-income status seen for PH in 6 yearsYour subscription could not be saved. Please try again. Your subscription has been successful. Read NextDisclaimer:The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of Cebudailynews. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.