By Justine Irish D. Tabile, Senior Reporter

The Philippines should supplement its official poverty statistics with indicators that capture economic vulnerability, living standards and households’ capacity to absorb financial shocks, analysts said, as the country’s entry into the World Bank’s upper-middle income bracket raises questions about how deprivation is measured and how many households remain vulnerable even after moving above the official line.

The Philippines, together with Vietnam, recently joined the World Bank’s upper-middle income classification after its gross national income per capita surpassed the $4,636 threshold for the category.

However, the transition should not be interpreted to mean that most Filipino households have reached the middle class, said Marites M. Tiongco, a professor at De La Salle University’s Carlos L. Tiu School of Economics.

“For this reason, I would not abandon the existing official poverty measure. We need it for historical comparability and for monitoring extreme material deprivation,” she told BusinessWorld via Viber. “But I would strongly recommend that the Philippines move toward a dashboard of poverty, vulnerability and economic security, rather than relying on one binary poverty threshold.”

According to the 2025 Family Income and Expenditure Survey, the share of Filipinos living in poverty declined to 9.7% from 15.5% in 2023. This translated to about 11.08 million poor Filipinos, significantly lower than the 17.54 million recorded in 2023.

Poverty incidence among families fell to 6.4%, equivalent to 1.9 million families, from 10.9%, or about three million families, in 2023. The Philippine Statistics Authority (PSA) defines poverty incidence among families as the proportion of families whose incomes fall below the minimum needed to meet basic food and nonfood requirements.

For 2025, the average monthly poverty threshold for a family of five rose 5.5% to P14,634 from P13,873 in 2023.

Ms. Tiongco said the official poverty line should be complemented by a near-poverty threshold that identifies households at risk of slipping back into poverty as a result of inflation, unemployment, illness or natural disasters. She also recommended relative-income and multidimensional poverty measures covering health, education, housing, sanitation, digital access and employment quality.

“As countries move toward higher income levels, poverty becomes partly about the ability to participate in the prevailing standard of living, not simply biological subsistence,” she said.

The government should also measure whether households can withstand a one-, three- or six-month income interruption, taking into account their savings, debt, insurance coverage and exposure to catastrophic healthcare expenses, she added.

Diwa C. Guinigundo, GlobalSource Partners analyst and principal adviser for the Philippines, said the country’s income classification and its official poverty threshold serve different purposes, and automatically changing the threshold following the reclassification could create an artificial break in the poverty data series.

“What we need to do is to supplement the existing poverty measure,” he told BusinessWorld via Viber.

He recommended retaining the PSA poverty line for policy targeting and historical comparison while adding indicators of near-poverty, relative deprivation and multidimensional poverty.

“The next stage of Philippine poverty policy should therefore be about economic security, not just poverty reduction,” he said. “That means good jobs, higher and more predictable incomes, affordable food and energy, quality public services, and social protection against shocks.”

Mr. Guinigundo said relying on a single poverty figure could result in the government overlooking a large segment of the population that remains only marginally above the official threshold. Otherwise, the decline in poverty could obscure the large number of Filipinos who remain just above that line, he added.

“In other words, the poverty line tells us who is poor; it does not tell us who is secure,” Mr. Guinigundo said.

Jonathan L. Ravelas, senior adviser at Reyes Tacandong & Co., likewise said poverty measurements should cover access to healthcare and education, housing quality and financial security.

“The goal is no longer just reducing poverty, but building a larger and more resilient middle class that can withstand economic shocks,” he said.

Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, said the government may have to revisit its measurement stick and compare it with the World Bank’s international poverty benchmark for upper-middle income economies.

“As the economy moves up the income ladder, what we use to measure what a ‘decent life’ is may also have to change,” Mr. Agonia told BusinessWorld via e-mail. “Additionally, more reporting can be done with quality of life indicators beyond income, in a similar way to the Multidimensional Poverty Index: health, education, and specific living standards.”

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the threshold should reflect inflation, the cost of living and global best practices.

The government should also determine whether Filipinos lifted out of poverty are supported by recurring income, employment and sustainable livelihoods rather than temporary cash assistance, he said.

“Financial assistance should be developmental in nature and with the aim of graduating to higher income levels, rather than perpetual, unless for the elderly, young, persons with disabilities and those that cannot help themselves,” he said.

Ms. Tiongco said any review should determine whether the food and nonfood baskets underlying the threshold still represent a credible minimum standard of living. Changes in the costs of housing, transportation, healthcare, education and communications may mean that some expenses once considered discretionary have become necessities, she said.

“Access to a smartphone, internet connectivity and transportation, for example, can now be prerequisites for finding and maintaining employment,” she said. “Poverty measurement should evolve as the structure of society and the economy evolves.”