NEDA: Upper middle-income status for Philippines likely delayed

·2 min read
NEDA's Socioeconomic Planning chief Arsenio Balisacan listens during an economic briefing.
National Economic and Development Authority (NEDA) Socioeconomic Planning Secretary Arsenio Balisacan attends an economic briefing following President Ferdinand Marcos Jr's first State of the Nation Address, in Pasay City, Metro Manila, Philippines, July 26, 2022. REUTERS/Lisa Marie David

The National Economic and Development Authority (NEDA) announced in a forum on Wednesday (August 17) that with the current pace of the economy, the Philippines will likely take longer in reaching upper middle-income status.

“Considering the impact of the COVID-19 pandemic, achieving that target will likely be delayed by a few years, even under the most optimistic projections for growth,” Socioeconomic Planning Secretary Arsenio Balisacan said. “In all likelihood, new disruptions and unforeseen events will emerge – circumstances, like the pandemic, that we cannot even imagine at this point.”

Balisacan earlier claimed in July that the Philippines is on its way to becoming an upper-middle-income country by 2024 if the current economic growth is sustained.

The economic planning agency also anticipated that the country will reach upper middle-income status by the end of the year, especially with the Philippine Innovation Act last February. At the time, Karl Chua, who was NEDA chief before Balisacan’s current term, believed that the country’s economic indicators put it on a path that would attain the income level by then.

Balisacan added, “Achieving the ‘AmBisyon’ is contingent on how long we can sustain a high growth trajectory for at least two more decades, similar to how the East Asian miracle economies performed when they quickly ascended the ladder of development.”

AmBisyon Natin 2040 is NEDA’s vision of the Philippines achieving high income status by 2040.

According to the World Bank, a country needs $4,096 to $12,695 income Gross National Income (GNI) per capita in order to achieve upper middle-income status. As of 2021, the Philippines is at a mere $3,640 GNI per capita.

In pre-pandemic 2019, the country was actually at a much higher level – $3,850 GNI per capita, just $246 shy of the threshold for upper middle-income status. But because of the COVID-19 pandemic, it sharply fell by 10.91% to a level of $3,430 GNI per capita.

Over a week ago, the Philippine Statistics Authority (PSA) announced a year-on-year increase in GDP by 7.4 percent. However, the economy contracted quarter-on-quarter by 0.1 percent, associated with declines in transportation and storage, manufacturing, and human health and social work activities.

Mark Ernest Famatigan is a news writer who focuses on Philippine politics. He is an advocate for press freedom and regularly follows developments in the Philippine economy. The views expressed are his own.

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