PH needs to grow 7% yearly to hit high-income status by 2050 —World Bank

The Philippines is seen to join the ranks of high-income countries in the next 25 years provided it sustains an economic growth rate of about 7% yearly, backed by reforms that would increase investments and job generation, according to the World Bank.

On Tuesday, the Washington-based multilateral lender released its Philippines Growth and Jobs Report, which detailed its observations on the country’s employment and economic developments in the past 15 years or since 2010.

At an event in Makati City, World Bank lead Gonzalo Varela said that the Philippines has doubled its gross domestic product (GDP), accelerating at an average of 5.3% from 2010 to 2023.

The report, however, said the country’s ambition of a poverty-free society by 2040 would require an annual growth rate of 7% to 10% “sustained over decades, on account of better integration into the global marketplace and faster productivity growth.”

Varela said that “without decisive reforms, the Philippines risks stagnating in a cycle of slow expansion and limited job quality.”

The World Bank economist, citing the report, said the country needs to implement 12 priority reforms grouped into three pillars:

Foundational investments in infrastructure and human capital

• Sustain public investment with a focus on connectivity infrastructure
• Support private climate adaptation by removing bottlenecks and prioritizing resilience
• Boost human capital by fast-tracking implementation of Enterprise Based Education and Training Act, and scaling up STEM and digital skills to better address AI challenge

Better regulations and governance

• Ensure regulations catch up with infrastructure progress to maximize investment impact
• Remove de facto barriers to market entry to make openness reforms work
• Facilitate land consolidation to enable productivity-enhancing reallocation in agriculture
• Adopt a proportional contribution system for part-time work to boost female labor force participation and correct talent misallocation
• Negotiate and implement deep trade agreements that drive domestic reform and global integration
• Implement competition-enhancing reforms in energy, logistics, and telecoms to cut costs for tradable sectors
• Strengthen local service delivery by building LGU capacity and aligning incentives

Private capital mobilization

• Introduce supplier development programs to link SMEs with multinational corporations and large firms and close the productivity spillover gap
• Focus innovation support where conditions are ripe, consolidate programs for scale, and create room for deeper venture capital markets

Varela said that if the set of recommended reforms were fully implemented, it could kick the country’s GDP up by 1.4 percentage points or could increase the annual growth rate to 6.8%, create 5.1 million additional jobs, and boost wages by 12.9% by 2040.

If the GDP growth rate of 6.8% is sustained until 2050, the World Bank economist said the Philippines economy could be brought “to the verge of high-income threshold.”

“Within 25 years you are close to that threshold of high-income,” he said.

At its current classification of countries by income, the World Bank set a threshold of $13,935 gross national income (GNI) per capita and above for a country to be classified as high-income.

For fiscal year 2026, the Philippines remained a lower middle-income country with a GNI per capita of $4,470, just $26 shy of hitting its ambition of elevating to upper-middle income status, which was set at a range of $4,496 to $13,935 GNI per capita.

GNI per capita measures the country’s total income divided by its population.

“The Philippines has demonstrated that investment-led growth can be inclusive. However, to secure a prosperous, job-rich future, the country must now double down on reforms that unlock productivity, empower regions, and connect to global markets. The next leap is within reach,” said Varela.

The World Bank economist emphasized that the Philippines needs to reduce the number of days before a foreign firm can set up shop in the country.

“It takes 106 days to register a foreign firm in the Philippines. It takes 15 days in Singapore. If you don't reduce that, if you don't reduce the number of days it takes, the processes, the complexity of the processes to register firms, you are erecting unnecessary entry barriers. Making investment more costly,” he said.

“These are the efforts that are much less costly than infrastructure investment. But at the same time, from a political economy point of view, they may be more difficult to achieve,” he added.

The World Bank report also highlighted that technology adoption among firms is critical for productivity, innovation, growth, and quality job creation.

“Technology adoption is no longer optional,” said Jaime Frias, World Bank senior economist.

“It is essential for firms to grow, compete, and create better jobs. The Philippines must invest in digital skills and foster an innovation ecosystem that empowers businesses to harness the full potential of emerging technologies.'' —VBL, GMA Integrated News