Sri Lanka regains upper-middle-income status in World Bank classification
(Photo by Christoph Theisinger on Unsplash)
Sri Lanka has been upgraded to an upper-middle-income economy in the World Bank Group’s latest country income classification update.
The new classification was announced by the World Bank’s Development Data Group on July 1, 2026, and will be used as a global reference until the end of June 2027.
The World Bank classifies economies into four income groups: low income, lower-middle income, upper-middle income, and high income. The classifications are updated on July 1 each year, based on gross national income (GNI) per capita estimates from the previous calendar year.
Accordingly, the latest update is based on 2025 GNI per capita estimates. The World Bank measures GNI per capita in US dollars using the Atlas method, which helps reduce the impact of short-term exchange rate changes.
Sri Lanka was classified as a low-income economy from 1987 to 1997. It later remained in the lower-middle-income group for many years and previously reached upper-middle-income status based on 2018 data. However, the country later returned to the lower-middle-income group.
With the latest update based on 2025 data, Sri Lanka has once again moved into the upper-middle-income group.
The World Bank said Sri Lanka’s reclassification is a story of recovery. It noted that just three years after the severe economic crisis in 2022, Sri Lanka’s real GDP grew by 5% in 2025.
According to the World Bank, this growth was driven by a rebound across industries, along with growth in financial and tourism services.
The World Bank also said Sri Lanka’s reclassification is a marker of resilience, although the country only narrowly crossed the required threshold.
Sri Lanka was among five economies that moved from lower-middle-income to upper-middle-income status in this year’s update. The others were Jordan, Micronesia, the Philippines, and Viet Nam. Togo moved from low-income to lower-middle-income status, while no country moved down in the latest classification.
The World Bank said the classifications are important because they help decide which countries can access concessional loans and development assistance. They also help governments, researchers, and international organizations track economic progress worldwide.
The upgrade comes after Sri Lanka’s 2022 economic crisis, during which the country faced severe foreign currency shortages, financial instability, and a major slowdown in economic activity.
