Sri Lanka Regains Upper-Middle-Income Status: Where India Stands In World Bank Ranking

Published 6 July 2026 · india

Sri Lanka Regains Upper-Middle-Income Status: Where India Stands In World Bank Ranking Published By, Last Updated: July 06, 2026, 08:15 IST Sri Lanka is among

Sri Lanka Regains Upper-Middle-Income Status: Where India Stands In World Bank Ranking Published By, Last Updated: July 06, 2026, 08:15 IST Sri Lanka is among six economies upgraded in the World Bank’s latest income classification. Here's how countries are classified and where India stands. Rapid Read India, despite being one of the world’s fastest-growing major economies, continues to be classified as a lower-middle-income economy. Sri Lanka has regained its upper-middle-income status in the World Bank’s latest country income classification, marking a significant milestone in the island nation’s recovery from the economic crisis that culminated in a sovereign debt default in 2022. The latest classifications, which came into effect on July 1, 2026 and will remain valid until June 30, 2027, cover 218 economies. This year, six economies moved to a higher income category. Along with Sri Lanka, Vietnam, the Philippines, Jordan and the Federated States of Micronesia graduated from the lower-middle to the upper-middle-income group, while Mayotte moved from upper-middle to high income. India, despite being one of the world’s fastest-growing major economies, continues to be classified as a lower-middle-income economy. So, what does the latest World Bank classification mean, how did Sri Lanka move up again, and why has India remained where it is? Why Has Sri Lanka Been Reclassified? The World Bank described Sri Lanka’s return to the upper-middle-income category as “a story of recovery", highlighting the country’s turnaround just three years after its worst financial crisis pushed it to the brink of collapse. According to the World Bank, Sri Lanka’s economy expanded by 5 per cent in 2025, supported by a broad-based rebound across industries as well as stronger tourism and financial services.

Its Atlas Gross Income (GNI) per capita also rose by 11.2 per cent. The institution attributed the improvement to stronger economic activity, lower inflation and exchange-rate stability. “The reclassification is a marker of resilience, though the country only narrowly crossed the threshold," the World Bank said. Sri Lanka had first entered the upper-middle-income category in 2019 before slipping back after economic growth weakened and the country plunged into a balance-of-payments crisis that eventually culminated in a sovereign default in 2022. Since then, the country’s recovery has been aided by reforms backed by the International Monetary Fund (IMF), fiscal tightening, debt restructuring, a revival in tourism and improving remittances, helping stabilise the economy. How Does The World Bank Classify Countries? The World Bank classifies economies into four income groups using Atlas Gross Income (GNI) per capita, rather than total Gross Domestic Product (GDP). For the latest FY2027 classifications Low income: Up to $1,185 Lower-middle income: $1,186-$4,695 Upper-middle income: $4,696-$14,575 High income: Above $14,575 The Atlas method is designed to minimise the impact of short-term exchange-rate volatility and inflation. It averages exchange rates over several years and adjusts them for inflation, allowing for more meaningful comparisons of income across economies and over time. As a result, a country’s income classification can change not only because of real income growth, but also due to revisions to national accounts, changes in population estimates, exchange-rate movements and updates to economic data. It is also important to note that the classification reflects a country’s average national income per person. It does not imply that every citizen has become wealthier or that living standards have improved uniformly.