Vietnam, Philippines upgraded to upper-middle income status

 All five major Southeast Asian economies — Singapore, Malaysia, Thailand, Indonesia and Vietnam — are now in the upper-middle-income tier or higher.

A general view of Hanoi as Vietnam’s capital expands both outwards and upwards.  (EPA Images pic)

MANILA:

The World Bank has elevated Vietnam and the Philippines to upper-middle income status after years of brisk of economic expansion, potentially bolstering investor confidence in the two nations.

All five of the major Southeast Asian economies — which include Singapore, Malaysia and Thailand — are now at the upper-middle income tier and above, according to a release from the World Bank on Wednesday.

Vietnam had been categorized as lower-middle income since 2009, while the Philippines was there since the late 1980s, the data showed.

The World Bank cited Vietnam’s export-led growth model and the Philippines’ broad-based expansion, “reflecting gains across all major industries, not a single sector boom, but an economy-wide shift.”

Their gross national income per capita reached US$4,970 and US$4,850 in 2025, respectively, exceeding the World Bank’s US$4,636 threshold for the category.

“Despite global and domestic shocks, we have relentlessly pursued inclusive growth, strengthened fundamentals, and remained on track with our development agenda,” Philippine Economic Planning Secretary Arsenio Balisacan said in a statement.

One of Asia’s fastest-growing economies, Vietnam is targeting annual double-digit growth this year, fueled in part by a spate of business-friendly reforms and a massive infrastructure investment drive.

A general view of Makati’s financial district skyline in Manila, where a growing number of skyscrapers reflects the country’s economic growth. (AFP pic)

The Philippines, however, faces a trickier path ahead. It cut its economic growth targets from 2026 through 2030 due to the Middle East tensions and an intense El Niño weather event.

Other countries that moved to upper-middle income category are Jordan, Micronesia, and Sri Lanka. Togo was reclassified to lower-middle income from low income. The share of economies classified as low-income has declined to 11% from 30% since 1987, the World Bank said.

Financing Impact

As upper-middle income nations, though, governments may get more limited access to development funding. The Philippines, for example, gets loans that carry below-market interest rates to help finance infrastructure, disaster recovery and social programs.

“The main point is, the more you go up the ladder of their classification means you are more self-sufficient and able to supply your own needs and resources as a nation, including, the fiscal part,” said Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines.

Balisacan said while some concessional Official Development Assistance may decline over time, the “gains from stronger fundamentals and improved market access are expected to outweigh these adjustments.”

He said the new classification does not diminish the Philippines’ ongoing challenges as income disparities persist and many still face economic difficulties. - FMT