The Philippines has been classified as an upper-middle income country by the World Bank, the institution confirmed on Wednesday, July 1. The upgrade came after the country's gross national income per capita reached $4,850, exceeding the World Bank's $4,636 threshold for upper-middle income economies. The reclassification was driven by broad-based economic expansion, with the Philippine economy growing an average of 5.8% from 2021 to 2025 and gross national income per capita rising 8.5% in 2025. The World Bank updates its income classifications every July 1 using gross national income per capita estimates from the previous calendar year, with the classifications serving as a global reference for governments, researchers, and international institutions to track economic progress.
Philippine Economy Records 5.8% Average Growth from 2021 to 2025
The World Bank stated the Philippines' reclassification was driven by broad-based economic expansion rather than a boom in just one sector. Growth across major industries helped lift gross national income per capita by 8.5% in 2025. The Philippines was one of five economies that moved from lower-middle to upper-middle income status this year, alongside Jordan, Micronesia, Sri Lanka, and Vietnam. Togo also moved up from low-income to lower-middle income.
"This confirms the resilience of the Philippine economy," Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio Balisacan said in a press release. "Despite global and domestic shocks, we have relentlessly pursued inclusive growth, strengthened fundamentals, and remained on track with our development agenda."
The World Bank's classifications cover 218 economies this year and will serve as a global reference until the end of June 2027. The categories help determine access to concessional loans and development assistance.
Inflation Reaches 6.8% in May 2026 as Structural Challenges Persist
The upgrade comes at a time when many Filipinos continue to deal with elevated living costs. The latest available inflation data from the Philippine Statistics Authority showed headline inflation at 6.8% in May 2026, above the Bangko Sentral ng Pilipinas' 2% to 4% target range. Food and non-alcoholic beverage inflation stood at 5.7%, transport inflation at 16.2%, and housing, water, electricity, gas, and other fuels at 7.8%.
The BSP estimated that inflation in June settled within a 6% to 7% range. Some price pressures eased as domestic fuel prices declined and major food items such as rice and meat became cheaper, but these were partly offset by higher electricity rates and vegetable prices.
Income inequality has eased but remains a concern. The Philippine Statistics Authority's Family Income and Expenditure Survey placed average annual family income at P353,230 in 2023, while average annual family expenditure stood at P258,050. Those averages mask large differences across households and regions, with the National Capital Region posting the highest average family expenditure and poorer regions such as the Bangsamoro Autonomous Region in Muslim Mindanao among those with the lowest.
Unemployment Stands at 4.7% with 7.41 Million Underemployed Workers
In April 2026, the unemployment rate stood at 4.7%, equivalent to 2.41 million jobless Filipinos. A larger number, 7.41 million employed Filipinos, were underemployed, meaning they wanted additional work hours, another job, or a new job with longer hours. The underemployment rate rose to 15.2% in April from 14.6% a year earlier.
"Our OFWs have played an important role in reaching this milestone," Balisacan said. "At the same time, our long-term goal is to create more high-quality jobs at home so overseas employment becomes a choice, not a necessity."
Gross national income per capita is a national average, not a measure of how income is distributed among households. It also includes income earned by Filipinos abroad, meaning overseas Filipino workers helped push the country across the threshold.
Balisacan acknowledged that the new classification does not remove structural problems. "We acknowledge that income disparities persist, and many continue to face economic difficulties. Our priority is to ensure that growth becomes more inclusive, and that its benefits reach all Filipinos," he said.
FAQ
What did the World Bank announce about the Philippines on July 1?
The World Bank confirmed on Wednesday, July 1, that the Philippines has been classified as an upper-middle income country after its gross national income per capita reached $4,850, exceeding the $4,636 threshold for upper-middle income economies.
How much did the Philippine economy grow from 2021 to 2025?
The Philippine economy grew by an average of 5.8% from 2021 to 2025, with growth across major industries helping lift gross national income per capita by 8.5% in 2025, according to the World Bank.
What is the current unemployment and underemployment situation in the Philippines?
In April 2026, the unemployment rate stood at 4.7%, equivalent to 2.41 million jobless Filipinos. The underemployment rate was 15.2%, affecting 7.41 million employed Filipinos who wanted additional work hours, another job, or a new job with longer hours.
