PHL on track to reach upper middle-income status, says NEDA chief

THE PHILIPPINES is still going on on its way to becoming an upper middle income earner economy next year as long as the growth momentum continues, said Arsenio M. Balisacan, secretary of the National Economic and Development Authority (NEDA).

“If growth is not tempered this year, [we] should be on track,” he told reporters on the sidelines of the BusinessWorld Economic Forum on Wednesday.

The government of President Ferdinand R. Marcos Jr. has set a goal for the Philippines to achieve upper-middle-income status by 2025. An upper middle-income country means that its gross national income (GNI) per capita is between $4,466 and 4,466. $13,845.

The World Bank classiFThe Philippines is a lower-middle-income country, with a GNI per capita of $3,950.

Mr. Balisacan said gross domestic product (GDP) growth must average 6.1% over the next three quarters to achieve the government’s growth target of 6-7%.

The Philippine economy grew 5.7% in the United States Ffirst quarter, slightly faster than 5.5% in the previous quarter.

“There are still three quarters available. The good thing is that inflation is now manageable. Even though we expected worse for April [print,] it turned out better than expected. So we hope this continues,” Mr. Balisacan said.

InFInflation accelerated for the third month in a row from 3.7% in March to 3.8% in April. InFInflation averaged 3.4% in the January-April period, lower than the central bank’s 3.8% full-year forecast.

In the coming months, NEDA expects economic growth to be favorable as the Bangko Sentral ng Pilipinas (BSP) was “less aggressive” at its last policy meeting and announced a possible interest rate cut in August.

“If the BSP is not going to raise rates further, and in fact the governor has indicated that they might start easing, expectations will improve, and expectations will boost consumption,” Mr. Balisacan told reporters.

Last week, the Monetary Board kept its target reverse repurchase rate unchanged at a 17-year high of 6.5%.

The waning El Niño drought pattern and expected easing in rice prices could also improve the country’s growth prospects, according to the NEDA chief.

“As El Niño wanes, we expect global prices for commodities, including rice, to moderate and start to decline, especially for rice,” Mr. Balisacan said.

Rice in itFInflation, which contributes almost half of total inflation, accelerated by 23.9% in April. However, this was slower than the 24.4% in the previous month.

Robert Dan J. Roces, chief economist at Security Bank Corp., said achieving upper-middle-income status “is not just about reaching a specific threshold, but about building an equitable economy.”

“While the Philippines has made significant progress in recent years, driven by factors such as a young population, a thriving services sector and increasing foreign investment, it is also critical that the benefitsFeconomic growth is more evenly distributed,” Mr. Roces said in a Viber message.

To increase GNI per capita, the country must also ensure competitiveness in all sectors, address infrastructure gaps and challenges and improve governance in all institutions, Mr Roces said.

The Philippines has been classified as a lower-middle-income economy since 1987, according to initial World Bank data.

“While the Philippines has strong growth prospects that indicate it could achieve upper-middle-income status within a few years, several challenges – such as a potential global economic slowdown, infrastructure and education shortages, and the impact of natural disasters – could hinder this goal . ” Jonathan L. Ravelas, senior advisor, professional services Firm Reyes Tacandong & Co., said in a Viber message.

The World Bank predicts that the Philippines will be the fastest growing economy in Southeast Asia this year, with a growth forecast of 5.8%.

For 2025, the multilateral lender increased its growth forecast for the Philippines from 5.8% to 5.9%.

However, the World Bank’s growth prospects for the Philippines still fall short of the government’s target range of 6-7%.

Speaking at the BusinessWorld Economic Forum, Mr. Balisacan cited the need to “diversify” the country’s sources of growth to ensure inclusive and sustainable economic expansion.

“So, what are the growth drivers? We are pushing on all fronts. There are plenty of opportunities across the economy to enable public infrastructure such as energy, water and physical and digital connectivity, as well as social infrastructure such as schools, healthcare institutions and housing,” he said.

The government also wants to expand growth beyond the National Capital Region (NCR), he added. — Beatriz Marie D. Cruz