Sri Lanka remains classified as a lower-middle-income economy in the World Bank’s latest update on country income classifications for the fiscal year 2026.

The annual announcement, released on 1 July, is based on gross national income (GNI) per capita for the previous year, calculated using the Atlas method to minimise the impact of exchange rate fluctuations.

According to the World Bank, economies are grouped into four categories: Low-income (GNI per capita of $ 1,135 or less), lower-middle-income ($ 1,136 to $ 4,465), upper-middle-income ($ 4,466 to $ 13,845), and high-income ($ 13,846 or more).

These thresholds are updated each year to reflect global inflation using the International Monetary Fund’s Special Drawing Rights (SDR) deflator.

Sri Lanka’s continued placement in the lower-middle-income bracket reflects its current GNI per capita, which remains below the level required to move into the upper-middle-income group. The classification also plays a role in determining eligibility for development aid and concessional financing.

Across South Asia, the World Bank’s data shows a significant shift in income levels over recent decades. In 1987, all South Asian countries were classified as low-income. By 2024, this had dropped to 13%, with most countries now in the lower-middle- or upper-middle-income categories.

India remains a lower-middle-income economy, nearing the upper-middle threshold. Bangladesh and Nepal continue in the lower-middle-income bracket with steady growth, while the Maldives maintains its upper-middle-income status, supported largely by its tourism sector.

The World Bank also notes that inflation, currency movements, and demographic changes continue to impact GNI per capita figures throughout the region.