Philippines Ascends to Upper-Middle Income Status, Yet Trails ASEAN Peers in Investor Confidence

MANILA, Philippines — The Philippines has officially been reclassified as an upper-middle-income economy by the World Bank, a significant milestone that marks its exit from lower-middle-income status after nearly four decades. The reclassification follows the country's gross national income (GNI) per capita reaching $4,850, surpassing the threshold of $4,636. Despite this economic achievement, global investors continue to rank the Philippines behind several of its Southeast Asian neighbors in terms of confidence. Kearney's 2026 Foreign Direct Investment (FDI) Confidence Index shows the Philippines slipping to 18th out of 25 emerging markets, down from 16th place in 2025. It trails Thailand (6th), Malaysia (7th), Indonesia (13th), and Vietnam (16th). Marco de la Rosa, Kearney Philippines country head, and Varun Arora, Southeast Asia managing partner, noted that while the country's new income status offers a stronger narrative for investors, it has not yet translated into a tangible boost in investor confidence. "Unfortunately, in the last two to three years, in the FDI index and the investments, Philippines has dropped rankings a bit vis-a-vis the ASEAN countries, which has also reflected the flow of the money," Arora told Philstar.com. They emphasized that the Philippines must now match its upgraded income status with enhanced competitiveness, infrastructure, and governance. While global business leaders identify talent and skills, natural resources, and economic performance as key investment attractors, they rate the country lowest in infrastructure and governance, highlighting critical gaps that could hinder long-term competitiveness. De la Rosa pointed out that the Philippines remains at the lower end of the upper-middle-income bracket, which ranges from $4,636 to $14,375 in GNI per capita. "I mean, we've moved up a level in terms of the classification, but we are still actually, from a gross national income standpoint, lower than Vietnam, Thailand, Malaysia, etc," he said. Comparing the country's new status to a football club's promotion to a higher league, de la Rosa and Arora suggested that the Philippines has demonstrated sufficient progress but now faces a more competitive environment where it will be scrutinized more closely against stronger markets. President Ferdinand Marcos Jr. has already leveraged the new income status in his pitches to foreign investors, describing the Philippines as having "solid macroeconomic fundamentals." However, Kearney advises treating this upgrade not as an endpoint but as a catalyst for accelerated improvements in infrastructure, governance, and economic diversification. "The stakes will only keep getting higher and higher," de la Rosa concluded. "Ultimately we need to compete to win."