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Saturday, July 4, 2026 Vol. 21 No. 263
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‘HASTEN REFORMS TO REALIZE GAINS FROM NEW INCOME RANK’ WHAT CHANGES NOW?
The Philippines’ new upper middle-income status, at a glance NEXT CHALLENGES
Stronger investor confidence
Improve ease of doing business
Better credit profile
Reliable, affordable energy
More attractive to multinationals
Upgrade digital infrastructure
Supports EU, US and ASEAN trade ties
Develop digital talent
Boosts high-value sectors (IT-BPM, AI, manufacturing)
Streamline regulations and ensure policy stability
THE MILESTONE $4,850 Philippines’ GNI per capita (2025) $4,635 World Bank threshold for upper middle-income status ~40 years Time spent as a lower middle-income economy
By Bless Aubrey Ogerio
S
ECURING the upper middle-income country (UMIC) status could increase the appeal of the Philippines to foreign investors, but business groups said the milestone will only translate into sustained investments if the government accelerates reforms to improve the country’s competitiveness. The World Bank this week reclassified the Philippines as an upper middle-income economy after its gross national income per capita reached $4,850 in 2025, exceeding the $4,635 threshold. The move ended nearly four decades of lower middle-income classification and fulfilled one of the Marcos administration’s key economic targets. While economists have
TRADE ON THE MENU Canadian Prime Minister Mark Carney, left, and Philippine President Ferdinand Marcos Jr. pose with employees during a visit to a Jollibee restaurant in Vancouver on
Thursday, July 2, 2026. The visit followed talks in which the two leaders pledged to deepen cooperation in trade, energy, critical minerals, defense and maritime security, and pursue a Canada-Philippines free-trade agreement. Carney said the one million-strong Filipino-Canadian community is “at the very heart” of Canada and highlighted strategic opportunities for both countries to strengthen energy security and develop critical minerals. DARRYL DYCK/THE CANADIAN PRESS VIA AP
BAD LOANS RISE AS OIL SHOCK HIKES COSTS
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By Andrea E. San Juan
ORROWER stress among households and businesses is now evident as they struggle to repay debts on time due to the combined effects of rising prices of goods, elevated business costs and higher interest rates, according to analysts. Experts raised this concern after preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that the gross nonperforming loans (NPLs) ratio climbed to 3.44 percent in May— the highest in nine months or since August 2025. Data showed that the peso value of bad loans climbed to a new record high of P601.41 billion, which is 14.02 percent higher than the P527.449 billion recorded in endMay 2025. Similarly, bad loans as of May were higher by 3.71 percent than the P579.885 billion as of April 2026.
NPLs, also known as “bad” or “soured” loans, are credit accommodations that have not been paid for 90 days or more after the due date. The NPL ratio measures the proportion of bad loans to total loans. Meanwhile, total loan portfolio amounted to P17.48 trillion as of end-May 2026. John Paolo R. Rivera, Senior Research Fellow at Philippine Institute for Development Studies (PIDS) explained that the bad loans ratio in May “suggests that some households and businesses are beginning to feel the cumulative effects of elevated inflation, higher
₧601.41B
interest rates, slower economic growth, and external shocks.” He noted that the Middle East conflict has contributed by raising energy costs and adding uncertainty, which can weaken borrowers’ repayment capacity.
Bad loans
The record value of bank loans overdue by at least 90 days, as analysts warn of mounting repayment pressures on households and businesses.
‘Caution flag’
DATA from the central bank also indicated that the ratio, which measures the banks’ capacity to absorb losses from bad loans, plunged to 88.92 percent—the lowest level in over four years or since March 2022 when the NPL coverage ratio was at 88.38 percent. Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., said this indicates that “non-performing loans are growing faster than banks are setting aside provisions for potential losses.” “This divergence may reflect banks’ view that asset quality risks remain manageable and that the current increase in bad loans is still within expected levels. That said, it is something that deserves close monitoring,” he said.
“Some households and businesses are beginning to feel the cumulative effects of elevated inflation, higher interest rates, slower economic growth, and external shocks.”— John Paolo R. Rivera, Senior Research Fellow at Philippine Institute for Development Studies (PIDS)
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PRESENT during the turnover of 75 classroom chairs to Kayquit Elementary School were (from left) Teacher Ma. Cecilia Cruzada, Vice President for Internal Affairs of the KES Alumni Association; Evelyn Marcelino, Principal of Kayquit Elementary School; spouses Nency S. Rodrin and Numeriano B. Rodrin of KES Batch ’65; Cecilia B. Banaag, President of the KES Alumni Association; Samuel Feranil, Vice President for External Affairs of the KES Alumni Association; and Melchor Ambas, member of KES Batch ’74.
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Probability of a very strong El Niño developing by late 2026 to early 2027, according to NOAA, with ANZ warning the Philippines is Asia's most vulnerable economy because of its dependence on imported rice and high food-price sensitivity.
noted that the reclassification may eventually reduce the country’s access to concessional financing, business organizations said its more immediate impact will be on investor perception (See: https://businessmirror.com.ph/2026/07/02/ umics-price-tough-fiscal-hurdle/). The IT and Business Process Association of the Philippines (IBPAP) said the upgrade reinforces the country’s credentials as multinational companies reassess investment locations. “Upper middle-income status affirms the strength and stability of the Philippine economy. The reclassification improves the country’s credit profile and gives global investors added confidence in the Philippines as a long-term investment destination,” IBPAP told BusinessMirror in an email on Thursday.
ETERNAL GARDENS PRESIDENT GIVES BACK TO ALMA MATER, DONATES ARMCHAIRS TO KAYQUIT ELEMENTARY SCHOOL
PHL seen most vulnerable to El Niño in Asia
HE Philippines is emerging as the most vulnerable to an El Niño shock compared to its peers in Asia as food-price sensitivity remains high in the country, according to ANZ Research. “The Philippines appears the most vulnerable. Food-price sensitivity remains high, while imported rice continues to account for a meaningful share of domestic consumption,” said the research arm of Australia-based ANZ Banking Group (ANZ). Although rice inventories are somewhat higher than a year ago, it said the improvement has been “modest.” “This leaves the Philippines exposed to a combination of weaker domestic agricultural production, higher food import costs and tighter
BM Graphics: Ed Davad
OPPORTUNITIES
S students prepare for the opening of School Year 2026–2027, Kayquit Elementary School has received a meaningful gift from one of its distinguished alumni. Numeriano B. Rodrin, President of Eternal Gardens and a member of Batch ’65, donated 75 new classroom chairs to help provide a more comfortable and conducive learning environment for the school’s learners. Rodrin, who spent his formative years at Kayquit Elementary School before building a successful career in business, said the initiative was his way of expressing gratitude to the institution that helped shape his future. “This school played an important role in my life and in the person I have become. Through this donation, I simply want to give back and help provide our students with a better learning environment as they begin another school year. Education remains one of the greatest investments we can make for the future, and I hope this small
contribution will inspire our young learners to pursue their dreams and make the most of every opportunity given to them,” Rodrin said. In a Facebook post on its official page, the school expressed its heartfelt gratitude to Rodrin and the KES Alumni Association for their generosity and continued support. According to the school, the donation will help create a more conducive learning environment and provide students with greater comfort as they begin the new academic year. The school also emphasized that the gesture reflects the strong bond between Kayquit Elementary School and its alumni, whose continued involvement helps strengthen the institution and create opportunities for future generations of Batang Kayquiteño. Through acts of generosity such as this, alumni not only give back to their alma mater but also inspire others in the community to contribute to the growth and development of the school.
PESO EXCHANGE RATES n US 61.5900 n JAPAN 0.3824 n UK 82.2288 n HK 7.8530 n CHINA 9.0800 n SINGAPORE 47.6445 n AUSTRALIA 42.6203 n EU 70.4282 n KOREA 0.0400 n SAUDI ARABIA 16.4039 Source: BSP (July 3, 2026)