The Philippines could soon join the ranks of upper middle income economies, a World Bank economist said on Monday, but the country still has a number of challenges to address if it is to meet long-term goals such as eliminating poverty.
Socioeconomic Planning Secretary Ernesto Pernia earlier this month said the Philippines—currently classified by the World Bank as a lower middle-income economy—could rise to the next bracket as early as next year.
Rong Qian, WB senior economist for the Philippines, told reporters that this was possible as the country’s current gross national income (GNI) per capita was close to breaching the needed mark.
The Washington-based lender classifies upper middle income countries as those with GNI per capita between $3,896 to $12,055. The Philippines was at $3,660 as of last year.
With regard to the country’s Ambisyon 2040 goals, however, the World Bank economist said per capita income would have to triple over the next two decades.
The economy will also have to grow by not less than 6.5 percent from 2018 to 2040, she added, faster than the 5.3 average since 2000,
In a report titled “Growth and Productivity in the Philippines:
Winning the Future,” the World Bank noted that boosting and sustaining productivity was critical.
“The Philippines’ ability to sustain its current high growth rate will depend primarily on two factors: how the country can accelerate investment in improving its physical infrastructure and how it can make better use of capital, labor and technology to increase productivity,” said Mara Warwick, WB country director for the Philippines.
A “booming economy,” she added, “will require constant boosts in productivity.”
Higher productivity, the WB said, would require removing constraints affecting entrepreneurs, potential investors, farmers and other producers.
It noted low domestic and foreign competition in key sectors such as telecommunications, transport and electricity, rules stifling entrepreneurship and restrictions on foreign ownership.
The report called for increased competition, the streamlining of procedures with respect to opening new businesses and paying taxes, opening up sectors to foreign investors, port and logistics infrastructure improvements, and labor law changes that will make hiring/firing easier and add flexibility to employment contracts. FROM A REPORT BY ED VELASCO