THE structure of Philippine economic growth needs to be changed if the country is to move past its goal of achieving upper middle-income status — likely to soon be realized — and rise to the high-income category, an Asian Development Bank (ADB) economist said.
The country has been classified by the World Bank as lower middle income since 1987, and the government wants to change this by next year, which ADB senior economist James Villafuerte told a Manila Times forum on Tuesday could be achieved given current macroeconomic trends.
“Most likely we will become [an] UMIC (upper middle-income country)… if not next year, the following year,” Villafuerte said.
Budget Secretary Amenah Pangandaman told the Times forum that upper middle-income status would be achieved next year.
The Marcos administration has pledged to achieve UMIC status by 2025 but changes to the World Bank’s thresholds have made this more difficult.
Gross national income (GNI) per capita rose to $4,230 in 2023, up from $3,950 in 2022, but this is still within the lower-middle-income range of $1,146 to $4,515. This was updated from the $1,136 to $4,465 level set last year.
To achieve upper-middle-income status, GNI per capita has to hit $4,516 to $14,005, higher than the previous range of $4,466 to $13,845.
“Now if we want to grow higher… what we calculated is that we need to grow by around 10 percent per year… to become high income by 2040, and that’s a tall order,” Villafuerte said.
The government is targeting 6.0- to 7.0-percent gross domestic product (GDP) growth this year, and Villafuerte said that the ADB expects 6.0- and 6.2-percent results this year and the next.
A pace of around 6.5 percent — the government is aiming for 6.5-8.0 percent in the medium term — will be needed to achieve and maintain UMIC status, he added.
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The Manila Times holds its year-end economic forum ‘Continuing growth, quality jobs, and record-low poverty rate’ at the Dusit Thani Manila on Oct. 22, 2024. Speaking at the event were Dennis Lapid, Bangko Sentral ng Pilipinas officer in charge of the Department of Economic Research; Neil Adrian Cabiles, Department of Finance assistant secretary at the Office of the Chief Economist; Ramon Monzon, Philippine Stock Exchange president; and James Villafuerte, Asian Development Bank regional lead economist. Budget Secretary Amenah Pangandaman served as the keynote speaker. Times vice president for sales and marketing Roda Zabat and President and COO Blanca Mercado were also present. PHOTOS BY J. GERARD SEGUIA
The structure of economic growth needs to be changed from being consumption-led, Villafuerte said, adding that growth is also not inclusive — meaning that a lot of Filipinos remain poor despite the relatively high GDP growth.
Manufacturing needs to be “more dynamic and bigger” to generate jobs and produce higher value-added goods, Villafuerte said. A constraint, however, is that the Philippines only gets 6.0 percent of total foreign direct investments going into the Asean region.
Labor productivity growth, meanwhile, is also behind peers such as Vietnam, where many agricultural workers have been shifted to manufacturing unlike in the Philippines.
Villafuerte said that economic growth corridors should be considered as these “could be a better path for the future,” noting that data is available to identify which areas of the country could host particular industries.
Connectivity and mobility, digital technologies and social infrastructure investments will be needed to support these growth corridors, he added.
The role of government also has to be changed from mandating things to becoming an intermediary, Villafuerte continued.
The ADB, he said, is supporting the Philippines’ growth ambitions via a country partnership strategy focused on human development, competitiveness and disaster resilience.
“I think every great achievement is a dream before it becomes a reality,” Villafuerte said. “And I think the Philippine economy with very able government officials can actually help us realize that dream.”
Also at the Times forum, Finance Assistant Secretary Neil Adrian Cabiles said the country would become less reliant on official development assistance (ODAs) or concessional loans as it moves toward achieving upper-middle-income status.
“Financing will be mostly from commercial sources,” he said. “We will maintain financing to be on the domestic side in the interest of a more stable footing and as a measure against foreign exchange risk.”
Cabiles said the reduced reliance on concessional financing would strengthen the impetus for the government to maintain the strictest form of fiscal discipline.
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