July 17, 2023

World Bank Group country classifications by income level for FY24 (July 1, 2023- June 30, 2024)

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 the Atlas 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 on Atlas GNI per capita as 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, while in 2022 only 12% fell into this category.  The extent of this decline is different between world regions, with the Sub-Saharan African region’s proportion of low-income countries falling from 74% to 46% in 2022, East Asia Pacific from 26% to 3%, and South Asia from 100% to 13% as economies moved to higher categories over this period. This is depicted visually in the diagram below, which shows the income patterns by region.

 

Classification changes

From a statistical perspective, classifications can change for two reasons:

  1. 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 2022 can be accessed here.
  2. Changes to classification thresholds: To keep income classification thresholds fixed in real terms, they are adjusted annually for inflation using the Special 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 are as follows:

Threshold table

Not surprisingly, of countries changing income categories in 2022, virtually all moved to a higher category as the recovery from the COVID-19 pandemic continued. In terms of Atlas GNI per capita, roughly 80% of countries showed improvement in 2022 vis-à-vis the pre-pandemic period (2019).

Both Guyana and American Samoa are moving from upper-middle to the high income category this year. The large increase in Guyana’s Atlas GNI per capita is driven by the increasing volume of oil and gas production which more than doubled in 2022. The nominal increase was further amplified by higher oil and gas prices, and despite strong increases in outflows of primary income abroad, Guyana’s nominal GNI jumped 86.2% leading to a 60.0% increase in Atlas GNI per capita. In American Samoa the increase in Atlas GNI per capita in 2022 was mainly due to a substantial downward revision (-18.3%) to population estimates by the United Nations Population Division, reflecting new available data from the 2020 census.

El Salvador, Indonesia, and West Bank and Gaza all had Atlas GNI very close to the upper-middle income threshold in 2021, so modest GDP growth in 2022 was enough to bring these economies into this category. The Salvadorean economy saw 2.6% real GDP growth, while Indonesia continued its strong post pandemic recovery and real GDP increased 5.3%. Following strong post-pandemic growth in 2021 (7.9%), 3.9% growth in 2022 was sufficient for West Bank and Gaza to cross the threshold into the upper-middle income category.

Guinea and Zambia both moved from the low income to the lower-middle income category this year. Despite political instability and supply disruptions in agriculture, the Guinea economy grew 4.7% in 2022, boosted by a strong mining sector. Zambia’s economy grew 4.7% in 2022, combined with 8.6% inflation (measured by the GDP deflator), which led nominal GNI to increase by 17.7% and Atlas GNI per capita by 13.6%.

Jordan was the only country with a downward classification change this year, mainly the result of a large upward revision (+8.6%) to population estimates published by the United Nations Population Division reflecting new data from the latest population census.

Source: World Bank Blogs – by NADA HAMADEHCATHERINE VAN ROMPAEYERIC METREAU
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