The World Bank has downgraded Lebanon to “lower-middle income” status in its latest income level rankings of global economies, marking a significant shift for a country that held “upper-middle income” status for nearly 25 years. This is Lebanon’s first drop in the World Bank’s classifications since 1998, underscoring the severe economic decline it has faced over the past decade.

The World Bank attributed Lebanon’s reclassification to a protracted decline in real GDP per capita, which has dropped every year since 2011, alongside a steep depreciation of the Lebanese pound. These factors have collectively impacted the country’s Gross National Income (GNI), a measure that includes both domestic economic activity (GDP) and income from abroad. The new ranking reflects Lebanon’s stark economic contraction since 2019, when the country plunged into a financial crisis.

To determine a country’s income classification, the World Bank calculates GNI per capita using the previous year’s data. Countries with a GNI per capita between $1,086 and $4,255 fall under the “lower middle income” bracket, while “upper middle income” applies to those between $4,256 and $13,205. Lebanon’s GNI per capita, which stood at $7,640 in 2013, had already fallen to $5,510 by 2020. Last year, the figure plunged further to $3,450, placing Lebanon squarely within the “lower middle income” category. 

Despite receiving $6.6 billion in remittances in 2021—representing over half of its GDP—Lebanon’s GNI per capita continued its downward trajectory. This sharp economic contraction has affected various sectors, with the World Bank estimating that Lebanon’s GDP has more than halved since 2019. 

The downgrade reflects the challenges Lebanon faces in recovering from its prolonged crisis, with deepening inflation and currency depreciation further eroding living standards. The World Bank’s reclassification places Lebanon in the company of nations grappling with similar economic pressures, emphasizing the need for robust structural reforms to prevent further decline.