Middle East conflict may derail Philippines upper middle-income bid

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May 3, 2026 | 12:00am

MANILA, Philippines — A prolonged Middle East conflict could weigh on the Philippines’ push to attain upper middle-income status if it dampens economic growth, according to the Department of Economy, Planning and Development (DEPDev).

“It affects, obviously, if your growth becomes so low or worse,” DEPDev Secretary Arsenio Balisacan told reporters when asked how a prolonged Middle East conflict could affect the county’s bid for upper middle-income status.

However, he said that the income classification to be released by the World Bank in July would be based on countries’ 2025 performance, before the conflict involving the United States, Israel and Iran escalated.

He also said that meeting the upper middle-income economy threshold would not automatically make the Philippines part of that group.

“Normally, I think they look at three years of consistent crossing the threshold, then they can classify,” he said.

He said the World Bank wants to see if the Philippines can maintain its performance over a period of time.

“Even if we pass the threshold last year, when that report comes out, we may still not do it,” he said.

Many other factors may also affect the country’s path to reaching upper middle-income status.

“It’s not just our growth, but also the growth of others. It’s not just our exchange rate, but also the exchange rate of others. Our inflation versus inflation of others,” he said.

He said the performance of other countries would also have an impact on the Philippines.

“If the currency of other countries improve, particularly our trading partners improve relative to us, then that will impact our numbers,” he said.

Earlier this year, the World Bank said that the Philippines is projected to be close to the upper middle-income threshold based on current gross national income (GNI) per capita trends.

GNI per capita measures the average income earned per citizen, including earnings from abroad.

A higher GNI per capita indicates greater economic prosperity.

In July last year, the World Bank’s income classification showed that the Philippines remained a lower middle-income country as its GNI fell $26 short of the threshold for upper middle-income economies.

In particular, the Philippines’ GNI was at 4,470 in 2024.

Lower middle-income countries are those with a GNI per capita of $1,136 to $4,495.

Meanwhile, upper middle-income countries have a GNI per capita between $4,496 and $13,935.

The Philippines has been classified as a lower middle-income country since 1987.