By Justine Irish D. Tabile, Senior Reporter

THE World Bank said the Philippines is approaching the gross national income (GNI) per capita threshold that would lead to its reclassification as an upper middle-income country (UMIC).

“The Philippines is projected to be close to the upper middle-income threshold based on current GNI per capita trends,” the World Bank said in an e-mail late Tuesday in the wake of the approval of an $800-million loan for the Philippines.

The bank greenlit the $800-million Philippines Growth and Jobs Development Policy Loan last week, which will help the country strengthen its fiscal resilience, attract higher-quality private investment, and upskill its workforce.

“This support comes as the Philippines’ GNI per capita has moved closer to the threshold of upper middle-income countries, on the back of inclusive GDP growth since 2010 that has enabled the economy to double in size every 13.5 years,” the World Bank said in a statement that was updated on March 17.

“Yet, the country today faces domestic and external shocks that underscore the value of ongoing fiscal and structural reforms to reach higher, more job-rich growth, and to reduce vulnerability to shocks,” it added.

Last year, the World Bank classified the Philippines as a lower middle-income country after it missed the threshold for UMIC status by $26. GNI per capita was $4,470, while the GNI per capita requirement for UMIC classification was $4,496-$13,935.

The bank is scheduled to release its updated annual thresholds and GNI per capita lists in July.

Earlier this year, the Department of Economy, Planning, and Development (DEPDev) said the Philippines is still on track to achieve UMIC status this year, despite posting weaker-than-expected 4.4% gross domestic product (GDP) growth in 2025.

DEPDev issued its assessment before the latest round of fighting broke out in the Persian Gulf. Asked to comment on Tuesday, Economy Secretary Arsenio M. Balisacan said: “The updated data in the July 1 publication of the WB covers the GNI per capita in 2025. The ongoing crisis in the Middle East will not affect the 2025 numbers.”

Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes told BusinessWorld that “slow growth from last year” makes it “not likely” that the Philippines will cross the threshold this year.

He also cited “inflation, which could further dampen growth” and “stagflation … if this war drags on” as risks to achieving UMIC status.

He said it is possible that the World Bank lowers the threshold, “but it is not something I would consider reassuring.”

Last year, the World Bank lowered the GNI per capita requirement for UMIC to $4,496-$13,935 from between $4,516 and $14,005 in 2024.

China Banking Corp. Chief Economist Domini S. Velasquez said that the “slowdown in growth, coupled with higher inflation, could delay or even reverse  progress toward UMIC status.”

“Higher inflation does two things: reduces real purchasing power (hurting households directly), and it can weaken the currency, which lowers GNI per capita in US dollar terms — the metric that matters for UMIC classification,” she said via Viber.

However, she said that the focus should not be on the UMIC label itself but on “improving lives through stable jobs, stronger incomes, and better resilience.”

“While we may be approaching the World Bank’s upper middle-income threshold, what matters is sustaining it — not just reaching it,” she added.

THE Philippine tourism industry, a Southeast Asia laggard, is expected to be among the worst-hit by the war in the Middle East, an economist said.

At the “Advancing Sustainable Tourism for Inclusive Growth in the Philippines” forum on Wednesday, John Paolo R. Rivera, a senior research fellow with the Philippine Institute for Development Studies (PIDS), described tourism as especially vulnerable during crises.

“War, whether indirectly or directly (affecting us) will have cascading and medium- to long-term effects on tourism. Other than oil prices, tourism is always one of the first sectors to be affected in times of conflict and also the last to recover,” he said.

“The war in the Middle East is far from us, (but any travel is risky) because of disruptions,” he added, eroding confidence among travelers.

He said that the government should look at its messaging and product development to assure that the Philippines can always deliver on its tourism offerings even in the face of possible unanticipated fallout from the war.

Richard G. Daenos, regional director at the Department of Tourism, said that the war would definitely bring economic strain and declines in tourism due to safety concerns.

“We really need… to strengthen our preparedness before the crisis escalates,” he said.

He said the war reinforces the lesson that the Philippines should develop a healthy domestic tourism segment and gear any international offerings to short-haul travelers.

“We have to have alliances with resilient markets like South Korea and Japan,” he added.

Cherry Lyn S. Rodolfo, advisory board member at the Dr. Andrew L. Tan Center for Tourism at the Asian Institute of Management, said that the Philippines will need to monitor markets such as the UK, Germany and France.

“These are actually European markets that have been growing quite well, very robust in the past years, that actually depend significantly on Middle East connectivity,” she said.

“The channel is already missing at this point, and although there are other channels that they can use, it would require deliberate route development efforts for airlines to move some of their capacity more to this side of Asia,” she added.

However, she said that the Philippines is still heavily dependent on the Asia and Oceania market, where connectivity is well-developed.

“If we invest more of our resources for marketing and promotions in these short-haul markets … this is already economic resilience as well,” she said. “We really have to start mobilizing and reallocating resources to these markets.”

Christina G. Aquino, a member of the technical panel for tourism and hospitality management at the Commission on Higher Education, said the Philippines needs to optimize for domestic travel for the time being, while also being ready for the eventual return of international visitors.

“We have to make sure that we continue developing or promoting our destinations because on the off chance that the war will stop, we will have products ready,” she said.

“We need to make sure that we do not stop inventing … because that would be a good way of ensuring that there is consistency,” she added.

The forum was anchored on a PIDS study released in December which in part recommended updating the Tourism Act (2009).

Mr. Rivera said that the priority amendments include infrastructure financing for tourism gateways and destinations, stronger and usable tourism enterprise zone incentives, digital and data governance for tourism, and clear local government unit-national coordination mechanisms.

If realized, these amendments, he said could result in growing investment, clear governance, bankable tourism zones, and stronger private sector confidence by 2028. — Justine Irish D. Tabile