The World Bank has downgraded Sri Lanka from an upper-middle income country to a lower-middle income country.
The change in classification comes in the World Bank’s latest country classifications by income level published on Wednesday (01).
Algeria and Sudan are the other two countries that have shifted to a lower category along with Sri Lanka.
The World Bank assigns the world’s economies to four income groups—low, lower-middle, upper-middle, and high-income countries.
Meanwhile, these classifications are updated each year on July 1 and are based on GNI per capita in current USD (using the Atlas method exchange rates) of the previous year (2019 in this case).
The classifications change for two reasons:
In each country, factors such as economic growth, inflation, exchange rates, and population growth influence GNI per capita. Revisions to national accounts methods and data can also influence GNI per capita. The updated data on GNI per capita data for 2019 can be accessed here.
To keep the income classification thresholds fixed in real terms, they are adjusted annually for inflation. The Special Drawing Rights (SDR) deflator is used which is a weighted average of the GDP deflators of China, Japan, the United Kingdom, the United States, and the Euro Area. This year, the thresholds have moved up in line with this inflation measure. The new thresholds (to be compared with GNI per capita in current USD, Atlas method) are as follows.
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