July 02, Colombo (LNW): Sri Lanka has been reinstated as an Upper-Middle Income Economy in the World Bank’s latest annual income classification, marking a significant milestone in the country’s recovery from the economic crisis that gripped the nation in 2022.
The updated declaration, released on July 01, reflects Sri Lanka’s improved economic performance over the past three years, with the World Bank highlighting the country’s return to growth after one of the most challenging periods in its post-independence history.
According to the World Bank, Sri Lanka’s economy expanded by five per cent in 2025, supported by a broad-based recovery across several key sectors. The rebound in manufacturing and industrial production, together with stronger performances in tourism and financial services, played a major role in driving the country’s economic resurgence.
Describing Sri Lanka as a notable recovery story, the World Bank said the country had rebounded from the brink of economic collapse in 2022 to record solid growth within a relatively short period. While acknowledging the achievement, it also noted that Sri Lanka only narrowly surpassed the threshold required to regain Upper-Middle Income status, indicating that continued economic stability and reform will be essential to maintain the classification.
The World Bank revises its income categories annually through its Development Data Group, using Gross National Income (GNI) per capita estimates from the preceding calendar year. Countries are grouped into four classifications—low, lower-middle, upper-middle and high income—based on internationally recognised thresholds.
This year’s assessment covers 218 economies and will remain the World Bank’s official global classification until the end of June 2027. The rankings are widely used by governments, international financial institutions and development agencies to assess economic progress and determine eligibility for certain forms of concessional financing and development assistance.
The World Bank calculates GNI per capita in US dollars using its Atlas methodology, which helps minimise the effects of short-term exchange rate fluctuations. The income thresholds are updated each year to reflect inflation, while changes in economic growth, population figures and national accounting data may also influence a country’s classification.