🇱🇰 Sri Lanka has pulled off a miraculous economic recovery, years after a devastating economic crisis.
Most South Asian countries are designated ‘lower middle income.’ But on July 1, the World Bank upgraded Sri Lanka to ‘upper middle income’ after its economy grew 5% in 2025, outpacing its 3.5% forecast.
The World Bank designates upper middle income countries as those with gross national income (GNI) per capita of $4,636 to $14,375. GNI is equivalent to GDP plus net income from abroad, which accounts for foreign debt. Sri Lanka, with a GNI per capita of $4,670, joins upper middle income countries such as China, Brazil, Mexico, and South Africa.
That said, GDP per capita is the more popular global metric. Sri Lanka has South Asia’s second-highest at $5,002 — crossing $5,000 for the first time in its modern history — surpassing that of Bhutan ($4,493), India ($2,703), Bangladesh ($2,597), Pakistan ($1,596), and Nepal ($1,536). Maldives has the region’s highest GDP per capita, $14,615.
Sri Lanka’s growth is especially remarkable because of its 2022 economic crisis, when it owed roughly $51 billion in foreign debt. As forex reserves plummeted, it couldn’t pay for necessities like medicine and fuel. It also halted debt repayments.
After getting a multibillion-dollar IMF bailout, Sri Lanka raised taxes, cut public spending, and restructured its debt. It received $4 billion in aid and credit from India, and saw its tourism sector improve. An all-time high of 2.3 million visitors arrived in 2025, bringing much-needed foreign currency.
“Sri Lanka is a story of recovery. Just three years after a severe economic crisis brought the country to the brink of collapse in 2022, real GDP grew by 5% in 2025, driven by a rebound across industries and growth in financial and tourism services,” the World Bank wrote. “The reclassification is a marker of resilience.”
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