Nepal becomes Lower-Middle Income Economy while Sri Lanka slips to Lower-Middle Income Economy


  • As per the 2020-21 World Bank’s Country Classification based on Income level, Nepal’s economy has moved to a higher category to become a Lower-middle Income economy while Sri Lanka’s economy has moved to a lower category to become a Lower-middle Income economy.
  • Every year, the World Bank classifies countries into four income groups- (i) Low (ii) Lower-Middle (iii) Upper-Middle (iv) High Income. 
  • This classification of the economies of countries across the world is updated on the 1st of July every year by the World Bank. 
  • The classification of a country is done by using the Atlas Method by the World Bank. 
  • World Bank is using the Atlas Method since 1993 to estimate the size of an economy. 
  • Under the Atlas Method, Gross National Income (GNI) of a country is converted into the current U.S. Dollars.
  • As per the 2020 Classification, India remains a Lower-Middle Income country.
  • Two years back, on 22nd May 2018, the Nepal Government announced that within the upcoming 10 years, its target will be to become a Lower-middle income country. 
  • Nepal achieved the target of becoming a Lower-Income country well ahead of its plans.
  • For becoming a Lower Middle-Income country, the World Bank has set the GNI per capita to be between USD 1036 to USD 4045. 
  • Nepal marginally crossed the line as its GNI in 2019 was USD 1090.
Sri Lanka:
  • For becoming an Upper-Middle Income country, GNI per capita to be between USD 4046 to USD 12,535. 
  • Sri Lanka becomes a Lower-Middle Income country from an Upper-Middle Income country as its GNI per capita in 2019 was marginally short of the minimum of USD 4046 required to become an Upper Middle Income Country. 
  • USD 4020 was Sri Lanka’s GNI per capita in 2019