PHL upper middle-income status by 2026 seen requiring 6% growth

The Philippines needs to sustain 6% growth until next year to achieve upper middle-income status by 2026, according to National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan.

“I think the upper middle-income status is challenging, but I think if we get 6% this year, 6% next year, we should achieve that upper middle-income status next year,” Mr. Balisacan told reporters during a briefing last week.

The Marcos administration is hoping to be reclassified as an upper middle-income economy this year or by 2026.

Growth of 6% matches the lower end of the government’s 6-8% growth target band for 2025-2028. It would exceed the 5.7% gross domestic product (GDP) posted in 2024, and the 5.5% in 2023.

The World Bank classifies countries by their gross national income (GNI). The four categories are low income, lower middle income, upper middle income and high income.

The Philippines is currently a lower middle-income country with GNI per capita of $4,230 in 2023, up from $3,950 in 2022.

Upper middle-income status is expected to require GNI per capita of between $4,516-$14,005.

Reinielle Matt M. Erece, economist at Oikonomia Advisory and Research, Inc. said upper middle-income status by next year is “still possible.”

“But it became more difficult as the economy takes a hit from heightened geopolitical risks especially in trade, remittances, and foreign investment,” he said.

US President Donald J. Trump on April 9 paused his new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remains in effect.

The Philippines faced a 17% reciprocal tariff, the second lowest in Southeast Asia.

Mr. Erece said Philippine GDP must expand by 6-7% annually, though he expects growth to be at the lower end of the target.

Peter Lee U, dean of the University of Asia and the Pacific’s School of Economics, said should the tariffs cause a global recession, it could prevent the Philippines from moving up the income category.

Such a recession can “cause our GDP/gross national product to shrink and our GNI per capita to fall. It’s anybody’s guess whether that will happen. Also, if a global economic slowdown happens, it may take until 2026 before we feel the full effect,” he said via Viber.

JP Morgan estimates a 60% probability of the world economy going into recession by year’s end, up from 40% in March.

Jose Enrique A. Africa, executive director at think tank IBON Foundation said even if Mr. Trump backtracks on the tariffs, inflation is expected to slow growth this year and the next.

“The reputational damage to the US has been done and countries will start adjusting to a world of even more uncertain supply chains, fiscal austerity to accommodate security spending from the vacuum being left by the US, and more volatile finances from a shaken dollar,” he said via Viber.

“These make it unlikely for the Philippines to rise to upper middle income this year — the only question really being how long this reclassification is going to be delayed,” he added.

Before the tariff announcement, World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu said in February that the Philippines is likely to reach upper middle-income status by 2026.

However, Mr. Balisacan said instead of the fixation on income status, the more significant indicators are employment, poverty, literacy and hunger and living standards, rather than GDP or GNI.

Mr. Africa said the Marcos administration instead should prepare to cushion the economic disruption on the vulnerable members of society.

“It should expand public education, health, housing and social protection services, and give redoubled support to domestic food production to moderate prices. The backsliding on the sustainable development goals… risks getting even worse,” he said.

Source: Business World

Why some Hong Kongers live in homes smaller than a parking space

Landlords in Hong Kong, a city with a notoriously high cost of housing, have found they can make more money by dividing a flat into two or more units

Tens of thousands of people in densely populated, land-poor Hong Kong live in tiny dwellings made by dividing up apartments, most smaller than a parking space. It’s an affordable option for students and low-income families but can also mean banging shins in cramped and in some cases substandard living spaces.

The city’s government has proposed new rules that would set minimum standards for such housing units, but residents and advocates for the poor worry that it could drive up rents and make it even harder to hang on in the city. The city’s eventual goal, mandated by Beijing, is to eliminate subdivided apartments over the next 25 years.

Officials are aiming to pass the rules into law within the year. After that, landlords will have a grace period to make their substandard flats meet the bar. The government has promised to assist affected residents in resettlement and adopt a gradual approach in its policy implementation to avoid causing panic.

Here are some of the numbers that illustrate the residents’ living conditions and the proposed policy.

7.5 million Hong Kong’s population in mid-2024

80 square kilometers (31 square miles) How much land is used for housing in the densely-packed territory, according to the city’s planning department

110,000 The number of dwellings created by dividing apartments

220,000 The number of people who live in them

10 square meters (110 square feet) The median size of the units that have been carved out. About one-fourth are less than eight square meters (86 square feet), the minimum size mandated under the proposed rules

12.5 square meters (135 square feet) The standard size of a parking space in Hong Kong

5,000 Hong Kong dollars: or PHP 37,000 the median rent for a unit in a subdivided apartment

33,000 Estimated number of units that would need major renovations under the proposed rules

2049 The year by which China’s central government wants Hong Kong to phase out subdivided units. It will mark 100 years of communist rule in China.

Source: Philstar

Applying AI in the construction sector

The construction industry, long vital to economic development, faces numerous challenges that have driven the need for innovation. These problems range from inefficiency, safety concerns, and cost overruns to environmental impact and resource limitations. Climate change and its devastating impact on our built environment are the key issues that have led to the development and application of these transformative technologies in construction. In response, design and construction professionals, with the aid of artificial intelligence (AI) and advanced building materials, have produced groundbreaking solutions.

Slow project delivery. From design to execution, construction is a complex process involving numerous stakeholders, tight schedules, and a large amount of logistical coordination. Its projects are notorious for delays, budget overruns and inefficiency. Delays due to unforeseen problems, material shortages and human error are common, leading to cost escalations and missed deadlines.

AI has been a game-changer in addressing inefficiency. With predictive analytics, it can help the construction team foresee potential delays, enabling project managers to proactively resolve issues. AI-driven tools optimize schedules and resource allocation, improving overall project timelines. On the materials side, innovations like 3D printing have sped up construction processes, while self-healing materials reduce the need for costly repairs, ensuring the structure's durability over time.

A global labor shortage confronts the construction industry with many skilled workers aging out of the industry and a lack of younger workers entering the field. This shortage is exacerbated by construction work's physically demanding nature, which deters many potential workers. Moreover, labor costs continue to rise as demand outstrips supply.

AI-driven robotics and assistive technologies offer an efficient alternative to human labor, making their task easier, safer and more efficient. AI-equipped robots and drones can perform repetitive tasks like bricklaying, surveying and material transport, reducing the reliance on human workers. 3D printing allows for the rapid production of building components, optimizing the need for skilled manual labor while ensuring high precision and reduced errors. As a result, AI and automation help maintain productivity levels despite the shrinking labor force.

Safety concerns. The construction industry is one of the most dangerous sectors, with a high number of fatalities and injuries occurring on job sites. Accidents result from improper safety protocols, human error and hazardous working conditions, leading to legal liabilities and increased insurance costs.

Assistive and proper tools help improve safety by minimizing potential hazards before they result in accidents. AI-based systems can analyze real-time data from construction sites, such as worker movement patterns, weather conditions, and machinery malfunctions, to provide safety alerts and suggest corrective actions. AI-equipped drones can inspect hard-to-reach areas, reducing the need for workers to access dangerous zones. Advanced building materials like impact-resistant glass and self-healing concrete contribute to the buildings' structural integrity, minimizing the risk of damage during construction or after their completion.

Environmental impact. The construction industry is a major contributor to environmental degradation. The extraction of raw materials, high energy consumption, and waste generation are significant issues. Buildings consume a considerable amount of energy over their lifespans due to heating, cooling, and other operational demands, contributing to carbon emissions and environmental harm.

AI can help professionals design to optimize resource use, reduce waste, and ensure that projects are more energy-efficient. By leveraging AI algorithms, construction companies can do the same while lowering costs. Advanced building materials like smart glass, high-performance insulation and photovoltaic materials can reduce energy consumption in buildings, making them more sustainable. The use of recycled materials in construction, such as recycled steel and bio-based concrete, helps minimize the industry's carbon footprint.

Rising costs of construction materials. The rising costs of raw materials such as steel, wood, concrete and other natural material resources have made construction more expensive. They are driven by supply chain disruptions, geopolitical factors, inflation and resource scarcity. The increased prices of essential building materials result in higher project costs and make it harder for construction companies to remain competitive.

AI technology can help reduce material costs by optimizing the use of resources and minimizing waste. It can analyze data and suggest ways to cut down on material consumption while maintaining structural integrity. New materials like the development of 3D printing, self-healing concrete and other faux materials provide more cost-effective, long-lasting solutions. Ty help reduce the overall amount of maintenance, weight and repairs required during a building's lifespan, mitigating the impact of rising raw material prices.

Construction projects often have a lot of errors and suffer from quality issues due to poor workmanship, design flaws, and material defects. These issues can result in structural problems, costly repairs and delays. Ensuring consistent quality control across large-scale projects is a significant challenge.

AI tech can help detect errors early on in the construction process by analyzing data from sensors, construction logs and building models. By monitoring real-time progress, it can identify deviations from the planned design and suggest corrections, ensuring higher quality control. Advanced building materials like nanomaterials and high-performance concrete improve the structural integrity and durability of buildings, ensuring they meet higher standards and reducing the need for repairs.

Complexity in design and building customization. As architectural designs become more complex, traditional construction methods struggle to meet the demand for innovative and customized buildings. Designers often face limitations in terms of material properties, structural stability and aesthetic challenges in trying to push the boundaries of architectural creativity.

The AI-driven Building Information Modeling (BIM) allows for more advanced and accurate designs by automating repetitive tasks, optimizing spatial layouts, and ensuring regulatory compliance. It facilitates the use of complex materials like 3D-printed components and customized nanomaterials, which are flexible and can be tailored to meet a design's specific needs. This technological synergy allows for greater creativity in construction while maintaining structural integrity and cost-effectiveness.

Long-term performance

Building lifespan and maintenance challenges. Many construction projects face significant challenges related to the long-term performance and maintenance of buildings. Cracks, wear-and-tear, corrosion, and other forms of degradation can reduce the lifespan of structures, increasing maintenance costs and reducing building safety. Inefficient post-construction operations and maintenance can also be costly and time-consuming.

The development of self-healing materials and smart materials has been a breakthrough in addressing long-term building maintenance. Self-healing concrete automatically seals cracks as they form, reducing the need for frequent repairs. AI technology can monitor building conditions over time: by using sensors and data analysis to detect early signs of wear or failure, it allows for preventative maintenance and extends the lifespan of buildings. It also helps design professionals in creating resilient, sustainable green buildings.

The construction industry is grappling with several critical challenges, from inefficiency, labor shortages, environmental sustainability, to rising material costs. AI and Advanced Building Materials have emerged as vital solutions to these issues. AI is streamlining operations, improving project management and enhancing safety, while Advanced Building Materials are contributing to more sustainable, durable and energy-efficient construction practices. Their innovations are setting new standards for the construction industry.

Together, they are shaping a smarter, greener and more efficient construction industry by improving efficiency, reducing costs and enhancing safety. They are enabling the construction of more sustainable, durable and innovative structures — one that can meet the challenges of a rapidly urbanizing world.

As these technologies continue to evolve, they will play an increasingly important role in overcoming the many obstacles facing the construction industry, which then will be able to deliver better, more resilient and environmentally friendly infrastructure for future generations.

Source: Business World