Understanding country income: World Bank Group income classifications for FY26 (July 1, 2025–June, 2026)

Every year, the World Bank Group classifies the world’s economies into four income groups: low, lower-middle, upper-middle, and high. These classifications, updated each year on July 1, are based on the previous year’s Gross National Income (GNI) per capita, expressed in U.S. dollars using the Atlas method.
 

The Importance of Income Classification

A country’s income classification not only reflects its level of development, but it also has the potential to influence its development trajectory. It affects eligibility for official development assistance and concessional financing.
 

Evolution of Income Classification

Since the late 1980s, the classification of countries into income categories has transformed. The number of low-income countries has steadily declined, while the number of high-income countries has increased.

This shift reflects broader global economic developments, including sustained growth in many developing countries, greater integration into the global economy, and the effects of policy reforms and international organizations’ support. In 1987, 30% of reporting countries were classified as low-income and 25% as high-income countries. By 2024, these ratios shifted to 12% low-income and 40% high-income. 

Regional Progression

The shifts in income classification vary significantly across regions:

• East Asia & Pacific: In 1987, 26% of countries were low-income; by 2024, only 3% remained in this category.
• Europe & Central Asia: No low-income countries in both 1987 and 2024, with a slight decrease in high-income countries from 71% to 69%.
• Latin America & the Caribbean: Low-income countries reduced from 2 in 1987 to 0 in 2024, while high-income countries increased from 9% to 46%.
• Middle East & North Africa : Low-income countries increased from 2 to 3, with high-income countries rising to 35%.
• South Asia: All countries moved from low-income in 1987 to lower-middle- and upper-middle-income by 2024.
• Sub-Saharan Africa: Low-income countries decreased from 75% to 45%, with one country reaching high-income status.

These changing compositions are depicted visually in the diagram below, which shows country classifications by region and over time since 1987.

Classification Changes for FY2026

The updated country income classifications for FY26, based on the Atlas GNI per capita of 2024. They reveal shifts due to changes in Atlas GNI per capita and classification thresholds. These thresholds are adjusted annually for inflation using the Special Drawing Rights (SDR) deflator. Often the thresholds go up with this adjustment, however occasionally, including this year, the thresholds have moved down slightly due to the appreciation of the U.S. dollar vs. other currencies.

Notable Country Movements

Costa Rica — moved from the “upper-middle income” to the “high income” category. The Costa Rican economy has seen consistently strong growth recently, with an average growth rate of 4.7% over the past three years. In 2023, Costa Rica’s Atlas GNI per capita was approaching the upper-middle income threshold. The 4.3% growth rate recorded in 2024, driven by strong domestic demand (private consumption and investment), was sufficient to push Costa Rica into the “high income” category this year.

Cabo Verde and Samoa both moved up from the “lower-middle income” to the “upper-middle income” category this year:

• In 2024, Cabo Verde’s GDP grew 7.3%, a 2-point increase compared with 2023. This growth was driven mainly by tourism related industries (+ 16.5%), while GDP deflator slowed from 4.1% in 2023 to 1.7% in 2024. Notably, the UN Population Division revised population levels downwards (-12.8% for 2023), explaining the overall 16.8% increase observed in Atlas GNI per capita.
• Samoa’s economy grew 9.4% in 2024, driven by a recovering tourism sector, ongoing reconstruction efforts, and strong remittances boosting consumption. Nominal GNI rose 14.8%. The population grew slightly (0.6%), while the exchange rate remained stable. Consequently, Samoa’s Atlas GNI per capita increased to $4,650, crossing into the upper-middle income threshold.

Namibia was the only country whose classification moved downward this year, from the “upper-middle income” to the “lower-middle income” category. In 2024, Namibia’s GDP grew 3.7%, a 0.7-point deceleration from 2023. Inflation (based on the GDP deflator) slowed from 6.6% in 2023 to 3.3% in 2024. One of the main factors behind the slower GDP growth was a sharp deceleration in mining and quarrying, for which growth went from +19.3% in 2023 to -1.2% in 2024 due to weak demand for diamonds. Population data was adjusted upwards by the United Nations Population Division (+13.8% for 2023), leading to a 12.9% decrease in the Atlas GNI per capita.
 

Recommendations for Policymakers

The World Bank Group’s income classifications provide valuable insights into global economic trends and development progress. As countries continue to evolve economically, these classifications will remain crucial for shaping development policies and strategies. Policymakers should consider these classifications when designing economic policies and strategies. Understanding the factors influencing income classification can guide efforts stimulating economic growth, help manage inflation, and enhance integration into the global economy.
 

More information

Detailed information on how the World Bank Group classifies countries. The country and lending groups page 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 2024, which may be revised as countries publish improved final estimates.

Source : World Bank