The World Bank announces per capita income thresholds for countries every July 1st, classifying them into income groups based on their economic status.
This classification, conducted by the World Bank since 1989, aims to reflect countries' levels of development.
The income thresholds used by the World Bank for country classification are updated using the Special Drawing Rights (SDR) deflator used by the IMF.
The baseline per capita income used for classification is obtained by dividing a country's GDP by its population. Therefore, a country's per capita income varies based on factors such as economic growth rates, inflation rates, currency exchange rates, and population growth rates.
WORLD BANK INCOME THRESHOLDS AND COUNTRY CLASSIFICATIONS
The World Bank classifies countries into four income groups: low-income, middle-income (lower middle and upper middle), and high-income countries.
Due to the wide range of per capita income bands used for the middle-income group, these countries are further divided into lower middle-income and upper middle-income countries.
According to the new income thresholds announced by the World Bank on July 1, 2024, countries with a per capita income below $1,145 are classified as low-income countries, while countries with a per capita income ranging from $1,146 to $14,005 are classified as middle-income countries.
Additionally, countries with a per capita income above $14,005 are classified as high-income countries.
Moreover, due to the broad income band set for middle-income group countries, countries with a per capita income between $1,146 and $4,515 are classified as lower middle-income countries, while countries with a per capita income between $4,516 and $14,005 are classified as upper middle-income countries.
WHICH COUNTRIES' INCOME CLASSIFICATIONS CHANGED IN 2023?
According to the income thresholds announced by the World Bank, some countries moved up to a higher income group due to an increase in per capita income, while others moved down to a lower income group due to a decrease in per capita income.
For instance, Bulgaria, Palau, and Russia moved from the upper middle-income category to the high-income category.
Algeria, Iran, Mongolia, and Ukraine moved up from lower middle-income to upper middle-income in 2023, while only Palestine moved down from upper middle-income to lower middle-income.
According to the World Bank's July 2024 data, Türkiye remained in the upper middle-income group without changing its position.
However, it is clear that the method used by the World Bank for country income classification overlooks countries' purchasing power and many other important factors, indicating significant shortcomings in this method.
