How Vietnam, Sri Lanka, Philippines gained World Bank upper-middle-income status

Highlights

• 5 countries upgraded from lower-middle to upper-middle income
• Sri Lanka returns to upper-middle-income status after economic crisis
• Vietnam’s export-led boom drives rapid income growth
• Philippines advances on broad-based economic expansion
• Jordan’s reclassification follows a major statistical revision
• Togo moves up after updated population census
• Bangladesh remains a lower-middle-income country

Five countries, including Vietnam, Sri Lanka and the Philippines, have been promoted from lower-middle-income to upper-middle-income status in the World Bank’s latest country income classifications, highlighting the diverse paths countries can take to improve their economic standing.

According to the World Bank’s annual update, released on 1 July, Sri Lanka, Vietnam, the Philippines, Jordan and Micronesia have all moved into the upper-middle-income category, while Togo has graduated from low-income to lower-middle-income status. No country was downgraded this year.

Meanwhile, Bangladesh’s position remains unchanged. The country continues to be classified as a lower-middle-income economy despite its latest estimated per capita income of $3,020, according to the Bangladesh Bureau of Statistics (BBS).

The World Bank updates the income classifications every July based on the previous calendar year’s Gross National Income (GNI) per capita, calculated using the Atlas method. The system groups 218 economies into four categories: low, lower-middle, upper-middle and high income.

The classifications are widely used to determine eligibility for concessional financing and development assistance, while also serving as a benchmark for measuring economic progress.

Although the six countries moved up in the same assessment, their journeys differed significantly.

Vietnam secured its promotion through sustained export-led growth. Exports expanded by more than 15% in both 2024 and 2025, while GDP grew by 7% and 8%, respectively. Between 2021 and 2025, the country’s GNI increased by an average of 10% annually, making it one of Asia’s fastest-growing economies.

The Philippines reached upper-middle-income status through broad-based economic expansion rather than reliance on a single sector. Its economy grew by an average of 5.8% annually over the past five years, supported by gains across manufacturing, services and other major industries.

Sri Lanka’s promotion marks a remarkable recovery from the severe economic crisis that pushed the country to the brink of collapse in 2022. Just three years later, its economy rebounded with 5% GDP growth in 2025, driven by stronger industrial activity and a revival in tourism and financial services, allowing it to narrowly cross the upper-middle-income threshold.

Jordan’s reclassification was driven less by rapid economic growth than by improved statistical measurement. Following a comprehensive rebasing of its national accounts, authorities found the country’s economy was nearly 10% larger than previously estimated. Combined with 2.8% economic growth in 2025, the revised figures lifted Jordan into the higher income group.

Micronesia’s promotion reflected steady post-pandemic recovery, supported mainly by construction and agriculture, although weaker net primary income limited stronger gains.

Togo, meanwhile, became the only country to graduate from low-income to lower-middle-income status. The key factor was an 11.7% downward revision in its population following the release of the 2022 national census. Since GNI is measured on a per-person basis, the smaller population significantly increased per capita income. Economic growth of 5.9% and exchange rate movements also contributed to the upgrade.

The World Bank noted that countries’ classifications are influenced not only by economic growth but also by inflation-adjusted income thresholds, exchange rate movements, population changes and revisions to national accounts.

Since 1987, the share of low-income economies worldwide has declined from 30% to just 11%, reflecting broad improvements in global living standards, although countries have advanced at very different speeds and through different policy paths.

For Bangladesh, remaining in the lower-middle-income category means its economic progress continues but has yet to meet the threshold required for upper-middle-income status under the World Bank’s methodology.