World Bank Raises Vietnam and Philippines to Upper-Middle-Income Status

JAKARTA - Vietnam and the Philippines have officially entered the World Bank's upper middle-income country group. This new status marks a significant change in Southeast Asia, as well as being able to strengthen investor confidence in the two economies that have been growing rapidly.

The Straits Times, quoted Thursday, July 2, reported that the World Bank upgraded the status of Vietnam and the Philippines after years of recording strong economic expansion. With this change, the five major economies in Southeast Asia are now in the upper-middle-income or higher group. The group includes Singapore, Malaysia, Thailand, Vietnam, and the Philippines.

Vietnam has previously been in the lower middle income category since 2009. The Philippines has been even longer, since the late 1980s.

The World Bank said Vietnam's growth was supported by an export-based economic model. Meanwhile, the Philippines rose in class thanks to more even expansion in various industries, not just a spike in one sector.

Vietnam's gross national income per capita reached 4,970 US dollars in 2025. The Philippines is at the level of 4,850 US dollars. Both of them passed the World Bank threshold of 4,636 US dollars to enter the upper middle income category.

Philippine Economic Planning Secretary Arsenio Balisacan said his country is still pursuing inclusive growth despite facing global and domestic pressures.

"Despite facing global and domestic shocks, we continue to pursue inclusive growth, strengthen the economic foundation, and remain on track with our development agenda," Balisacan said as quoted by The Straits Times.

Vietnam is now one of the fastest growing economies in Asia. The country is targeting double-digit growth by 2026, driven by business-friendly reforms and massive investment in the infrastructure sector.

The Philippines faces a tougher road. The country cut its economic growth target for 2026 to 2030 due to tensions in the Middle East and the strong impact of El Nino.

Jordan, Micronesia, and Sri Lanka also experienced a class increase. Meanwhile, Togo rose from a low-income group to a lower-middle income group. The World Bank noted that the share of the low-income economy fell to 11 percent from 30 percent since 1987.

However, the new status also carries consequences on access to development financing. As a middle-income country, the government could face more limited access to low-interest funding.

The Philippines, for example, has historically borrowed at below market rates to finance infrastructure, disaster recovery, and social programs.

Head of Economics at Union Bank of the Philippines Ruben Carlo Asuncion said the higher a country's position in the World Bank's classification, the greater the assumption that the country is able to meet its own needs and resources, including fiscal ones.

Balisacan admitted that some soft-floored official development assistance could decrease over time. However, he assessed that a stronger economic foundation and better market access would provide greater benefits.

He also stressed that the new status did not remove the challenges of the Philippines. There is still a gap in income, and many residents still face economic pressure.