PH PER CAPITA INCOME SLIPPED IN 2020

The Philippines’ target to climb to upper-middle income status next year will be more difficult as its gross national income (GNI) per capita last year dropped to $3,430 while the World Bank further raised the threshold across income groups.

According to World Bank data as of July 1, the Philippines’ GNI per capita amid last year’s pandemic-induced recession fell from $3,850 in 2019, reversing the upward trend prior to the COVID-19 crisis.

GNI referred to the total income generated by a country’s residents within and outside its borders. On the other hand, gross domestic product (GDP)—a proxy for economic performance—measures only local output.

The Philippines’ GDP shrank by a record 9.6 percent in 2020—its worst post-war recession. Its GNI slid by a faster 11.1 percent last year, Philippine Statistics Authority data showed.

As such, the Philippines remained a lower-middle income country, even as it aimed to achieve upper-middle income status in 2022.

It did not help that the upper-income threshold was further raised by the World Bank to $4,096 from $4,046 effective July 1, 2021.

The lower-middle income threshold was also jacked up to $1,046 this year from $1,035 previously.

Early this year, Socioeconomic Planning Secretary Karl Kendrick Chua remained optimistic of hitting the GNI per capita level needed to move up to upper-middle income country in 2022.

Back in January, Chua said the estimates of the state planning agency National Economic and Development Authority, which he headed, showed that 6.5-7.5 percent GDP growth this year and 8-10 percent economic expansion next year would help hike GNI per capita to upper-middle income levels.

However, President Duterte’s economic team last May downscaled their growth targets for 2021 and 2022 amid a prolonged pandemic. They now expected slower GDP growth of 6-7 percent this year and 7-9 percent next year.

The Inquirer asked Chua on Saturday what will be the impact on the Philippines’ goal to become upper-middle income next year of the lower GNI per capita in 2020 and the higher World Bank thresholds for income classifications but he was unable to reply as of press time.

Had the COVID-19 pandemic not happened, the Philippines was slated to graduate from lower-middle income economy status in 2020, ahead of the government’s 2022 target.

The delayed climb to upper-middle income status may nonetheless still benefit the Philippines at a time when it planned to sustain borrowings from multilateral lenders as well as bilateral development partners to beef up its war chest amid a protracted battle against COVID-19.

Had the Philippines become an upper-middle income economy last year, it will lose by 2022 the access to concessional interest rates now being slapped on official development assistance loans.

As such, staying as a lower-middle income country augured well to the Philippines’ borrowing spree during the near term.