Pinoys’ income must grow 6.8% to attain Umic dream
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NCOMES of Filipinos need to grow by almost 7 percent in order for the Philippines to become an Upper Middle Income Country (Umic), according to the Asean+3 Macroeconomic Research Office (Amro). In an e-mail, Amro Group Head and Principal Economist Runchana Pongsaparn told BUSINESSMIRROR the country’s per capita Gross National Income (GNI) must grow 6.8 percent to become an Umic and by 231 percent or more than triple to become a high income country (HIC). This is based on the World Bank’s estimate of the country’s GNI at $4,230 in 2023. To become an Umic, the country’s GNI per capita must increase to $4,516 using the 2023 estimates while becoming an HIC means seeing a per capita GNI of $14,005. “The Philippines is likely to become an up-
per middle-income country under the World Bank classification in the next couple of years. The steady GDP growth and robust remittance growth underpin the country’s GNI growth,” Pongsaparn told BUSINESSMIRROR. “We expect GDP growth to rise from 5.5 percent in 2023 to 5.8 percent in 2024, and accelerate to 6.3 percent in 2025, mainly benefiting from the pickup in the economy,” she added. Pongsaparn also said that to become an HIC by 2050, the Philippines must maintain an average growth of 4.54 percent in its GNI per capita in constant US dollar estimates in the next few decades. “While there will be challenges for the Philippines to attain high-income country status in the next few decades, it is still possible if the country can implement a suitable long-term growth strategy,” Pongsaparn said.
“To ensure strong growth over the long term, the Philippines has to overcome the scarring effects of the pandemic and implement a strategy for enhancing the country’s competitiveness,” she also stressed in her e-mail. Reducing the scarring effects of the pandemic on the country’s long-term growth potential entails being able to attract more investment and improve the availability of access to financing, Pongsaparn said. Access to financing should be focused on micro, small, and medium enterprises (MSMEs) who have “impaired” balance sheets due to the pandemic. The Philippines, Pongsaparn added, should also raise its productivity, as this will help improve job quality, as well as undertake measures to upskill its labor force. The AMRO economist said the country also needs to undertake “sufficient infrastructure in-
vestment” through a rigorous selection process conducted to find projects that will secure the country’s sustainable long-term growth. It is also imperative for the country to continue addressing its vulnerabilities from climate change by attracting more foreign direct investments that could help develop a sustainable economy. Earlier, a London-based think tank said the additional rate cuts to be implemented by the Bangko Sentral ng Pilipinas (BSP) will not be enough to boost the Philippine economy this year due to a projected slowdown in household consumption and remittances. Capital Economics sees Philippine GDP growing by 5.8 percent in 2025, a projection that is “below consensus.” For 2026, GDP exS “U,” A
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Thursday, January 2, 2025 Vol. 20 No. 82
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STILL AN INFLATION RISK B C U. O
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@caiordinario
UST when expectations began to emerge that inflation is already on a downtrend, a US-based think tank warned that expensive rice may again become a culprit for the faster increase in commodity prices. In an economic brief, Global Source Partners Country Analyst Diwa Guinigundo said this could make 2025 “problematic” and, as such, means monetary policy will be insufficient to address rising commodity prices. Guinigundo noted that the Bangko Sentral ng Pilipinas (BSP) adjusted its inflation forecasts for the year to 3.4 percent this year and 3.7 percent in 2026 on the back of expectations that higher domestic food prices could not be ignored. “With the BSP’s risk-adjusted inflation forecasts, we have an idea that the BSP itself realizes that risks could not be dismissed,” Guinigundo said. “With these risks, the Government ought to do something that works rather than the usual stuff.” S “E,” A
ROAST AND SHINE, IT’S 2025!
Lechon sellers in Parañaque City fire up the grill as demand for this iconic Filipino dish remains high at the start of 2025. Lechon, a slow-roasted whole pig known for its crispy skin and tender meat, is a beloved tradition in Filipino celebrations. From Noche Buena to New Year’s feasts, lechon symbolizes prosperity and shared joy, making it a staple of gatherings and festivities across the Philippines. NONIE REYES
Economy ‘promising’ amid headwinds IN NATL TAX ALLOTMENT: DBM T T BARMM SEES 14.36% DIP
HE Bangsamoro Autonomous Region of Muslim Mindanao (BARMM) saw a double-digit decline in National Tax Allotment (NTA) shares, according to the latest memorandum released by the Department of Budget and Management (DBM). Based on Local Budget Memorandum 90-A, while there was no change in the total NTA allocation in the budget, there were changes that included lower shares for almost all regions, led
by BARMM, the NTA of which declined by 14.36 percent. The changes also included a 21.39-percent increase in the NTA share of Zamboanga Peninsula. The other region that received an increase was Metro Manila or the National Capital Region (NCR) with a 0.015-percent increase in its NTA share. The DBM said the adjustments in the NTA shares of regions took into consideration the enactment S “BARMM,” A
B C U. O @caiordinario
HE Philippine economy remains “very promising” in 2025, despite headwinds that include external uncertainties in the Middle East and the United States, according to the National Economic and Development Authority (Neda). In an interview, Socioeconomic Planning Secretary Arsenio M. Balisacan told BM that the “world is watching,” particularly on how true Donald Trump will be to his campaign promises of
raising tariff rates. Balisacan also said “lingering problems” in the Middle East as well as the Russia-Ukraine war and their impact on the global economy are enough reasons to convince the economic team to monitor these developments. “I think [the Philippine economy is] very promising,” Balisacan told this newspaper. “Opportunities abound despite the challenges next year [2025].” On Trump, Balisacan said when campaigning, all politicians will make promises just to get the most votes and win the elections. But
when they win, he said, it becomes a more complicated matter. Balisacan said these politicians will realize that there is a need to perform balancing acts to reconcile “conflicting” interests to “move the economy” forward. “It’s not just your political survival but you’re now running a country with all these kinds of conflicting interests. And so you are in a business where you try to do balancing, which you don’t do when you’re in a political campaign,” Balisacan explained. On the Middle East as well as Europe, Balisacan said, these prob-
lems are not diminishing and have, to some extent, widened in scope, involving more countries. With this, Balisacan sees a higher chance that the impact would be far wider and could eventually spillover to the global economy. Seeing that the Philippines trade relations extends to beyond the region, the economy could also experience some of these spillovers. “Those are the ones that can be more threatening to the global economy. And whether we like it or not, we are part of that,” Balisacan S “E,” A
PESO EXCHANGE RATES US 58.0140 ■ JAPAN 0.3672 ■ UK 72.6799 ■ HK 7.4684 ■ SINGAPORE 42.6919 ■ AUSTRALIA 36.0847 ■ SAUDI ARABIA 15.4539 ■ EU 60.4738 ■ KOREA 0.0396 ■ CHINA 7.9498 Source: BSP (December 27, 2024)