Sri Lanka has regained upper-middle income status just three years after a severe economic crisis brought the country to the brink of collapse in 2022.
The World Bank, in its latest income classification update released yesterday reclassified Sri Lanka from the lower-middle-income category after the economy expanded by 5 percent in 2025, supported by a broad-based recovery across industries and growth in tourism and financial services.
This is a commendable recovery from the 2022 economic meltdown and offers fresh international validation of Sri Lanka's progress in restoring stability and growth under a difficult reform programme, the Daily Mirror Online reported.
Sri Lanka's real GDP grew by 5% in 2025, driven by a rebound across industries and growth in financial and tourism services. The reclassification is a marker of resilience, though the country only narrowly crossed the threshold, the World Bank said.
The World Bank has four country income classifications: high, upper middle, lower middle, and low.
The classifications are based on gross national income per capita estimates from the previous calendar year.
This year's edition covered 218 countries, and the results will serve as a global reference until the end of June 2027.
The Easter Sunday attacks in 2019, the COVID-19 pandemic and the subsequent balance-of-payments crisis culminated in the country's sovereign default in 2022, pushing the economy into its deepest downturn in decades.
The reclassification indicates the progress made since then under a far-reaching economic stabilisation effort backed by the International Monetary Fund (IMF), alongside fiscal consolidation, monetary reforms and external debt restructuring.
The recovery is attributed to revival in tourism, stronger worker remittances, improving external sector performance and a return to economic growth following two years of contraction.
Sri Lanka first entered the upper-middle-income category in 2019 before falling back to lower-middle-income status as economic growth slowed and income levels deteriorated amid mounting domestic and external pressures.
(With inputs from PTI)