The Philippines nears the upper-middle-income level but is “not likely” to achieve high-income status by 2040 if its current economic growth rate persists, Department of Economy, Planning and Development (DEPDev) Secretary Arsenio Balisacan said Thursday.
Balisacan told reporters in a midyear press briefing that the Philippine economy contracted by 9 percent in 2020 due to the COVID-19 pandemic, setting back its growth momentum.
“That set us back quite significantly… That’s quite a big deal, a lot of contraction,” he said.
This setback means the government needs to formulate a new long-term vision for 2025 to 2050. Balisacan said the DEPDev is mandated by a new law to develop this vision, which will update the existing “AmBisyon Natin 2040” plan.
“If we continue our momentum, we can still be within that before or up around 2050. But if we can grow faster while making it more inclusive, we can still meet the 2040s, perhaps. But we need to grow faster,” Balisacan said.
The gross domestic product grew 5.4 percent year-on-year gross domestic product (GDP) growth in the first quarter of 2025, falling short of the government’s 6.5 percent to 8.0 percent target outlined in the Philippine Development Plan 2023-2028.
Despite the 2040 target, the World Bank classifies the Philippines as a lower-middle-income economy. The government had expressed confidence in achieving upper-middle-income status by the end of this year or early next year.
Balisacan said the Philippines is on the verge of achieving upper-middle-income status, having met its gross national income (GNI) per capita targets for both 2023 and 2024. He noted that in the World Bank’s 2024 GNI per capita estimates, the country was only $26 short of the threshold.
From 2023 to the first quarter of 2025, the Philippines remained among Asia’s fastest-growing economies.
He said unemployment has dropped below pre-pandemic levels, and underemployment steadily declined in 2023 and 2024. Poverty incidence also fell to 15.5 percent in 2023, lifting an estimated 2.4 million Filipinos out of poverty. Inflation significantly eased from a peak of 8.7 percent in January 2023 to 1.4 percent in June 2025.
“These figures reflect the resilience of our economy amid global and domestic uncertainties, as well as the outcomes of our deliberate and sustained reforms,” Balisacan said.
He said the government, guided by the Philippine Development Plan, has developed strategic frameworks in areas such as innovation, water resources management and digital transformation to enhance cross-sectoral planning and implementation.
Structural reforms, including the enactment of the Public-Private Partnership (PPP) Code and amendments to investment liberalization laws, complement these efforts, aiming to unlock growth opportunities and improve public service delivery.
Despite these gains, Balisacan acknowledged that some development objectives have not yet been met. “Many global and domestic disruptions revealed vulnerabilities in our economy, while coordination and regulatory issues continue to delay some major infrastructure and social projects,” he said.
He said that a strong domestic economy is the best buffer against external shocks and called for “sustained efforts to ensure food and energy security, maintain low and stable inflation, and make a more diversified and competitive economic base.” Measures to lower the cost of doing business, improve regulatory efficiency, and attract investments in high-potential sectors are also crucial, he said.
Balisacan affirmed the Marcos Administration’s commitment to sustaining rapid and inclusive economic growth from 2025 to 2028. This will be achieved by promoting economic diversification, maintaining sound macroeconomic fundamentals, strengthening competitiveness and innovation, and reducing poverty to single-digit levels by the end of the term.
