Given that the Philippines will attain the status of an upper-middle income economy in 2026, how long will it take for it to become a high-income economy.  In a projection performed by  Jose Antonio E. Ramirez, M.S. in Industrial Economics from the University of Asia and Pacific and currently Economist at the Office of Senator Win Gatchalian, two possible scenarios were delineated.  Using Philippine Gross National Income (GNI) per capita (Atlas method, current US $) as the income metric and applying the World Bank high-income threshold in effect as of July 2025 (US $ 13, 935) two growth scenarios were assessed from a FY 2026 base GNI per capita of US $4,500.

              -Under an 8% Philippine annual GDP growth rate, combined with a 1 % population annual increase, GNI per capita rises from US $ 4,500 in FY 2026 to US $ 14,059 by FY 2043, crossing the high-income threshold and placing the Philippines’ transition to high-income income status in the early 2040s.

              -Under an alternative GDP annual growth rate of 6 %, with population growth likewise assumed at 1 % annually, GNI per capita increases from the base of US $ 4,500 in FY 2026 to US $ 14,350 by 2050, indicating a later transition.

              These simple projections how that a 6 %   GDP growth scenario is more likely to lead to an AmBisyon Natin, not in 2040,  but ten years later in 2050.  If GDP accelerates to 8% instead, First World status can still be attained during the decade of the 2040s.  The less bullish scenario assumed little structural changes, with the Philippine economy still overdependent on consumption propelled by OFW remittances and earnings of the BPO-IT sector.  In contrast. The high-growth scenario assumes significant structural changes, especially in agriculture.  That is why, even if a 6 % average annual growth is still one of the highest in the Indo-Pacific region, it is not sufficient to effect the necessary structural changes necessary for the Philippines to escape the Middle Income Trap. 

              Before we continue, it would be enlightening to point out the serious limitations of using GDP measures to indicate human flourishing or development. As we saw in describing what AmBisyon 2040 was all about, the people who responded to the survey about what they were aspiring for by the year 2040 expressed greater interest in the quality of life rather than the mere quantity of goods and services produced which is what GDP is all about.  They talked about “smart and innovative Filipinos, lifelong learners, healthy and productive citizens”, “skills, innovation and adaptability,” “stable employment, career progression work-life balance”, etc.  In Tagalog, they mentioned adjectives like “panatag” and “maginhawa” which are more qualitative than quantitative.  It is well known that GDP includes expenditures on both “goods” and “bads”.  It puts together clearly desirable expenditures such as those on food, education and health together with expenditures on goods or services which pollute the physical or moral environments and then add to these “bads” the costs of removing or countering their negative effects on society.  For example, expenditures on pornographic materials are captured by GDP and then the costs of curing the psychological harm, especially on young people, of these materials are also included in GDP.

              That is why in addition to the unavoidable use of quantitative measures in determining human progress, it is necessary to describe the desired state of society  in more qualitative terms, such as the aspirations embedded in AmBisyon Natin 2040 which are:

-Prosperous, predominantly middle class society.  By 2040, the Philippines aims to be  a country where the vast majority belongs to the middle class and poverty is eradicated.

-Long and healthy lives.  Filipinos are expected  to live longer, healthier lives thanks to better healthcare and lifestyle outcomes.

-Smart and innovative technology.  Education systems will produce critical thinkers, innovators and adaptable lifelong learners.

-High trust society.  There is trust in government and institutions, and communities are resilient and culturally vibrant.

-A more equitable distribution of income and wealth.

              From the alternative projections of Mr. Ramirez, the three Administrations that will be in place (including the present one) between now and 2040 should do their best to make the second one (GDP growing at 8 % annually) happen.  It is the growth scenario that will enable Philippine society to make  the necessary structural and institutional reforms that can lead to the vision of AmBisyon 2040.  Only by getting the GDP to grow by 8%  annually for the next 20 years will be there be sufficient  resources to bring down the poverty line from its high of 16 % to close zero twenty years from now.  In turn, the 8 % GDP scenario can be attained only if the agricultural sector grows at least at 3 % per annum in the next two decades, thus addressing food security and improving the incomes of farmers  and fisherfolks, who are among the poorest of the poor.  Also, the 8 % growth in GDP can only be attained if an annual inflow of $ 15 billion of FDI is attained, which will lead to an improvement of the ratio of Gross Capital Formation to GDP to closer to the average of about 30 % of GDP in the region and which significantly improves the quantity and quality of infrastructures.  We don’t have enough domestic savings to fund infrastructure projects like airports, railways, subways and tollways.

              The annual  8 % growth scenario can only be attained if an improvement in governance can significantly reduce the leakage of trillions of pesos through corruption, as happened in 2025.  These funds diverted away from corruption and a significant increase in FDIs will address the lingering problem of lack of funds for infrastructures and of bolstering investment in education and health which are direly needed to improve the quality of public education and health care.  More importantly, the Philippines can avoid the Middle Income Trap if farm productivity can be increased by the consolidation of millions of small farms so that large-scale capital can go into corporate farming, following the example of bananas and pineapples in the last century.  There are at least  nine  crops that can be planted in commercial plantations, i.e. coconut, coffee, cacao, bamboos, mangos , avocado, cashew, abaca, and pili.  There are already optimistic signs that large conglomerates like the First Pacific Group, the DACON group, the Lorenzo family, and the Benguet Corporation are ready to invest large capital on such commercial crops as bamboos, palm oil, coconut, and dairy production. 

 Government in turn will continue to improve the infrastructures for the small farmers, such as farm-to-market roads, irrigation systems, post-harvest facilities as well agricultural extension services.  Such public programs under a more efficient  and corruption-free Department of Agriculture will bring down the poverty rate to single-digit level and lower inflation but will have only a modest contribution to productivity improvement.  There is no substitute to attaining economies of scale through corporate  farming to enable significant application of more advanced technology. For comments, my email address is Bernardo.villegas@uap.asia.