(First of two parts)
A lot of foreigners who have seen Metro Manila and have observed the signs of prosperity almost everywhere in the metropolis often wonder why the Philippines is classified as a lower-middle income country.
The World Bank classifies countries based on their Gross National Income (GNI) or each country’s final income (also defined as Gross Domestic Product or GDP plus overseas income) divided by their population, or GNI per capita.
Low-income countries have a GNI per capita of $1,026 or less; lower middle-income countries have a GNI per capita of between $1,026 and $4,035; upper middle-income countries have a GNI per capita of between $4,035 and $12,475; and high-income countries have a GNI per capita of $12,476 or more.
Based on GNI per capita, 80 countries and territories make up the high-income group, 55 countries are classified as upper middle-income, 52 are lower middle-income, and 29, mostly in Africa, are low-income countries.
Among the major economies of the Association of Southeast Asian Nations (Asean), only Singapore, with a GNI per capita of $51,880 in 2015, is ranked as a high-income economy.
Malaysia and Thailand, with GNI per capita of $9,850 and $5,640, respectively, belong to the middle-income.
The lower middle-income group includes the Philippines (GNI per capita of $3,580), Indonesia (GNI per capita of $3,400) and Vietnam (GNI per capita of $2,050).
The Philippine Development Plan (PDP) expects the country to move up to upper middle-income status by 2022, or the end of President Rodrigo Duterte’s term.
In a presentation before the Philippines-Singapore Business Council (PSBC) Conference last August, Socioeconomic Planning Secretary Ernesto Pernia said the target could be achieved even earlier than under the PDP.
Assuming that the country’s GNI grew by 5 percent a year, Pernia said income per capita would be within the $4,000-$5,000 range by end of 2018, well within the upper middle-income category.
The Asian Development Bank (ADB) is more optimistic than the PDP. In April 2016, it said in a report that the Philippines, together with Indonesia and Sri Lanka, would reach upper middle-income status by 2020, or two years earlier than the government’s target.
The regional multi-lender’s 2016 Annual Evaluation Review of its operations and challenges cited the improvements in the countries’ infrastructure, public sector and social welfare programs development.
On my part, I say becoming an upper middle-income economy is within our grasp. I notice, based on statistics, that we’re ahead of Indonesia, and Vietnam is way behind us in terms of GNI per capita.
Also, we are growing faster than most of the major Asian economies. If we can sustain a GDP growth of 6.5 percent then we really should move faster to the upper middle-income category.
Considering that population is a vital component in computing for GNI per capita, the slowdown in our population growth will also increase our chances of improving our income status.
The final results of the 2010 National Statistics Office population census showed that Philippine population growth slowed down from the annual rate of 2.34 percent in 1990-2000 to 1.9 percent in 2000-2010.
In 2015, population growth slowed further to 1.72 percent, according to the Commission on Population.
The 2015 population of 100.98 million was half a million lower than what was forecast in 2010. The commission attributed the slower growth rate to wider use of contraceptives – 45 percent of couples used modern contraceptives in 2015, up from 38 percent in 2013.
(To be concluded)
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