Two of Indonesia's Neighbours Upgraded to Upper-Middle-Income Status

The World Bank has officially upgraded Vietnam and the Philippines to upper-middle-income status, citing their rapid economic expansion. With this reclassification, the two nations join Singapore, Malaysia, and Thailand, bringing the total number of upper-middle-income and above countries in ASEAN to five. Vietnam had been in the lower-middle-income category since 2009, whilst the Philippines had held that status since the late 1980s. The upgrade is expected to potentially boost investor confidence in both countries. The World Bank highlighted Vietnam’s export-based growth model and the Philippines’ broad-based expansion, noting that the latter reflects improvements across all major industries rather than a single sector, representing an overall economic shift. Both countries’ gross national income per capita surpassed the World Bank’s upper-middle-income threshold of US$4,636 in 2025, with Vietnam reaching US$4,970 and the Philippines reaching US$4,850. Vietnam, one of Asia’s fastest-growing economies, is targeting double-digit annual growth in 2026, partly driven by business-friendly reforms and a massive infrastructure investment push. The Philippines, however, is expected to face a more difficult path ahead, having cut its economic growth targets from 2026 to 2030 due to Middle East tensions and intense El Niño weather phenomena. Philippine Economic Planning Secretary Arsenio Balisacan said the country is relentlessly pursuing inclusive growth and strengthening fundamentals despite global and domestic shocks. As upper-middle-income countries, both governments will face more limited access to concessional development financing. The Philippines, for instance, has previously relied on below-market-rate loans to help fund infrastructure, disaster recovery, and social programmes. Union Bank of the Philippines chief economist Ruben Carlo Asuncion noted that a higher classification implies greater self-reliance and the ability to meet a country’s own needs and resources, including fiscally. Jordan, Micronesia, and Sri Lanka were also upgraded to upper-middle-income status, whilst Togo was reclassified from low-income to lower-middle-income.