MANILA, June 4, 2026 – The Philippines can end poverty and become a predominantly middle-class society by 2040, but only if it acts now through comprehensive reforms that address the barriers to job creation and strengthen household resilience, according to a new World Bank report released today.
The report, Building the Filipino Middle Class: Towards Resilient Futures and Poverty Eradication, finds that the Philippines has made historic progress: the poverty rate fell to 15.5 percent in 2023 from 23.5 percent in 2015, and income inequality dropped to its lowest level in four decades, with the Gini coefficient declining below 40 for he first time.
This progress is, however, far from secure. Nearly 28 percent of Filipinos are vulnerable or remain at risk of falling back into poverty, while the secure middle class, at about a quarter of the population, has barely grown since 2018.
The typical Filipino family earns just enough to stay above the poverty line – but not enough to feel economically secure. In fact, many families are so close to the edge that a single typhoon, a hospital bill, or a lost job can push them back into poverty. With 61 percent of the population at high risk from climate-related disasters, and most families having no savings or insurance to fall back on, the threat of losing what has been gained is real.
The report includes economic modeling for two futures: a business-as-usual scenario that would reduce poverty to 6 percent by 2040 and grow the secure middle class to 43 percent and; a comprehensive reform scenario – pairing growth and job creation policies with a focused equity and resilience agenda – which could lower poverty to 2.9 percent and boost the middle class to 55 percent, achieving the country’s Ambisyon Natin 2040 vision.
“With the right policy mix – one that boosts job creation and productivity while strengthening equity and resilience – the Philippines can all but eliminate poverty by 2040 and firmly put most of its people in the secure middle class. The goal is ambitious, but it is achievable with strong commitment to reforms. The World Bank stands ready to support the government of the Philippines in this journey,” said Zafer Mustafaoğlu, World Bank Division Director for the Philippines, Malaysia, and Brunei.
The report identifies three interconnected areas where reforms are most urgent.
Creating Better Jobs. Only one in three Filipino workers contributes to social security, leaving the vast majority unprotected in old age or job loss. The report calls for reforms to encourage broader opportunities for formal employment for lower-skilled workers. Equally urgent is universalizing early childhood care – to build human capital and enable more women to enter and stay in the workforce.
Strengthening Resilience. The report calls for updating the 4Ps program – the Philippines’ most cost-effective poverty-reduction program, having reduced poverty by 2.2 percentage points in 2023 – to index benefits to inflation and extend coverage to vulnerable households. It also recommends better agricultural insurance and rebalanced agricultural spending to sustainably lower food prices – both of which would particularly benefit the poorest families.
Improving public services. Quality public services, including in health and education, are essential to lasting poverty reduction – but they are not yet reaching those who need them most. Local governments spend only about two-thirds of their infrastructure budgets, and the poorest municipalities receive less funding per person than wealthier ones. The report recommends strengthening local capacity and breaking down data silos to get more out of every peso spent.
“Progress in the Philippines is real, but many families sit just above the poverty line, and a single shock can push them back,” said Liliana D. Sousa, Senior Economist at the World Bank. “That is why reform must work on two tracks simultaneously: faster income growth through better jobs for those at the bottom, and a resilience framework strong enough to protect the gains already made, combining robust social protection, expanded insurance coverage, and more effective local public spending.”
