The World Bank Group assigns the world’s economies[1]to four income groups: low, lower-middle, upper-middle, and high. The classifications are updated each year on July 1, based on the GNI per capita of the previous calendar year. GNI measures are expressed in United States dollars[2]using conversion factors derived according to theAtlas method, which in its current form was introduced in 1989[3]. The World Bank’s income classification aims to reflect a country’s level of development, drawing onAtlas GNI per capitaas a broadly available indicator of economic capacity.
The classification of countries into income categories has evolved significantly over the period since the late 1980s. In 1987, 30% of reporting countries were classified as low-income and 25% as high-income countries. Jumping to 2023, these overall ratios have shifted down to 12% in the low-income category and up to 40% in the high-income category.
The scale and direction of these shifts, however, varies a great deal between world regions. Here are some regional highlights:
- 100% of South Asian countries were classified as low-income countries in 1987, whereas this share has fallen to just 13% in 2023.
- In the Middle East and North Africa there is a higher share of low-income countries in 2023 (10%) than in 1987, when no countries were classified to this category.
- In Latin America and the Caribbean, the share of high-income countries has climbed from 9% in 1987 to 44% in 2023.
- Europe and Central Asia has a slightly lower share of high-income countries in 2023 (69%) than it did in 1987 (71%).
These changing compositions are depicted visually in the diagram below, which shows country classifications by region and over time since 1987.
Classification changes
The updated country income classifications for FY25, based on the GNI per capita of 2023, are availablehere.
From a statistical perspective, classifications can change for two reasons:
- Changes to Atlas GNI per capita: In each country, factors such as economic growth, inflation, exchange rates, and population growth can all influence the level of Atlas GNI per capita. Revisions to improve methods and data can also have an impact. Updated data on Atlas GNI per capita for 2023 can be accessedhere.
- Changes to classification thresholds: To keep income classification thresholds fixed in real terms, they are adjusted annually for inflation using theSpecial Drawing Rights (SDR) deflator, a weighted average of the GDP deflators of China, Japan, the United Kingdom, the United States, and the Euro Area. The new thresholds for Atlas GNI per capita (in US$) are as follows:
The chart below shows the economies moving to new income categories this year:
This year, three countries—Bulgaria, Palau, and Russia—moved from the upper-middle-income to the high-income category:
- Bulgariahas been steadily approaching the high-income threshold with modest growth throughout the post-pandemic recovery period, which continued in 2023 as real GDP grew 1.8%, supported by consumption demand.
- Palaualso continued its post-pandemic recovery as GDP returned to previous levels, growing by 0.4% in real terms. With inflation (as measured by the GDP deflator) at 8.1%, nominal GNI increased 10.0%.
- Economic activity inRussiawas influenced by a large increase in military related activity in 2023, while growth was also boosted by a rebound in trade (+6.8%), the financial sector (+8.7%), and construction (+6.6%). These factors led to increases in both real (3.6%) and nominal (10.9%) GDP, and Russia’s Atlas GNI per capita grew by 11.2%.
Algeria, Iran, Mongolia, and Ukraine all moved up from the lower-middle-income to the upper-middle-income category this year:
- While theAlgerian economy grew 4.1% in 2023, the main reason for the upward reclassification was a comprehensive revision to national accounts statistics undertaken by the Algerian authorities (Office National des Statistiques) to align with current international standards. This realignment resulted in an upward revision to the level of GDP (on average 13.3% higher over the 2018-2022 period) due, for example, to the expansion of investment estimates to include research and development, improved methods for measuring production in public administration, and improved coverage of the non-observed economy.
- Iran’s economy grew 5.0% in 2023, driven mainly by oil exports and supported by gains in services and manufacturing. GNI jumped 39.5% in nominal terms which, combined with the depreciation of the Iranian rial, resulted in a 17.6% increase of the Atlas GNI per capita.
- Mongoliacontinued its recovery after the pandemic, with real GDP increasing 7.0% in 2023. Growth was driven by expansions in mining of 23.4%, along with higher export prices which boosted exports by 53.4%.
- Ukraine’s upward change in classification resulted from a resumption of economic growth in 2023 (real GDP grew 5.3%, following a drop of 28.8% in 2022) along with a continued decline in population, which has fallen more than 15% since the invasion from Russia began. These factors were further amplified by price increases of domestically produced goods and services to result in a large increase in nominal Atlas GNI per capita of 18.5%. While Ukraine’s economy was significantly impaired by Russia’s invasion, real growth in 2023 was driven by construction activity (24.6%), reflecting a sizable increase in investment spending (52.9%) supporting Ukraine’s reconstruction effort in the wake of ongoing destruction.
West Bank and Gaza was the only country whose classification moved downward this year. The conflict in the Middle East began in October 2023, and while the impact on West Bank and Gaza was limited to the fourth quarter, its scale was nonetheless sufficient to lead to a 9.2% drop in nominal GDP (-5.5% in real terms). Since West Bank and Gaza’s economy was close to the threshold (it entered the upper-middle-income category only last year), these declines brought Atlas GNI per capita back down to the lower-middle-income category.
More information
Detailed information on how the World Bank Group classifies countries is availablehere. Thecountry and lending groupspage provides a complete list of economies classified by income, region, and World Bank lending status and includes links to prior years’ classifications. The classification tables include World Bank member countries, along with all other economies with populations greater than 30,000. These classifications reflect the best available GNI figures for 2023, which may be revised as countries publish improved final estimates.
Data forGNI,GNI per capita,GDP,GDP PPP, andPopulationfor 2023 are now available on the World Bank's Open Data Catalog. Note that these are estimates and may be revised. For more information, please contact us atdata@worldbank.org.
[1]The term country, used interchangeably with economy, does not imply political independence but refers to any territory for which authorities report separate social or economic statistics.
[2]In countries where dual or multiple exchange rates are in use, the exchange rate used to convert local currency units to US$ is an average of these exchange rates, provided necessary data are available.
[3]For data beginning in reference year 1987.
The authors are pleased to acknowledge the essential contributions of our colleagues,Charles Kouame, andTamirat Yacob to the preparation of this piece.Please note: The country classification described here aims to serve analytical purposes and changes have no direct impact on the eligibility for World Bank resources. In the classification used for World Bank operational purposes, a range of additional criteria are considered to determine country eligibility and the terms and conditions of Bank financing. For more information, please see theIBRD Financial Products web page.
- Africa
- East Asia and Pacific
- Europe and Central Asia
- Middle East and North Africa
- South Asia
- The World Region
