The World Bank has upgraded Nepals’ status from ‘lower income economy’ to ‘lower middle income economy’ in its latest country classification published on July 1,2020.
In the list, the classification is done based on the gross national income per capita and with an increase in its per capita from $960 in 2018 to $1090 in 2019, the small country managed to get the upgraded status.
According to the World Bank, GNI below $1026 is classified under lower income economy while GNI per capita of $1,036 to $4,045 comes under lower middle income economy. Even though the rank of Nepal has been elevated, Economists believe that the lower middle income status bestowed by the World Bank on Nepal does not mean much as it is simply a classification made by an institution.
There are different indicators that influence the economics of GNI ranging from growth rate to inflation and exchange rate. The GNI does not tell you what exactly is the position of a country on economic grounds but the World Bank believes that it is a close indicator of monetary measures of quality of life.
“It is important to emphasise that the World Bank’s income classifications use the GNI of the previous year (2019 in this case).Thus, the GNI numbers that are used for this year’s classification do not yet reflect the impact of COVID-19,” states the report.
Also as per the reports, there are seven economies across the world that have been moved to the higher category. Nepal, Tanzania, Romania, Nauru, Mauritius, Benin and Indonesia have been elevated while three economies–Algeria, Sri Lanka and Sudan, have been moved to the lower category.