On Monday, the World Bank upgraded Palau from an upper-middle-income to a high-income country. It has also upgraded Russia from an upper-middle-income country to a high-income country.
In its report, Palau’s upgrade is due to “ its post-pandemic recovery as GDP returned to previous levels, growing by 0.4% in real terms. With inflation (as measured by the GDP deflator) at 8.1%, nominal GNI increased 10.0%.”
Palau was upgraded into a high-income country, along with Russia and Bulgaria.
The high-income countries are often interchanged with the term first world, in the same category as the United States and the United Kingdom
A high-income economy is defined by the World Bank as a country with a gross national income per capita of US$13,845 or more.
The tourism sector is Palau’s biggest economic driver, contributing an estimated 40 percent to GDP. According to the US Department of State, GDP in 2021 was $257 million, approximately $14,243 per capita.
The government is the country’s largest employer, and recently, the minimum wage has also increased in Palau.
Former President Tommy Remenegsau had earlier said that Palau is miscategorized as high-income, hindering financial aid from international donors.
Many citizens in Palau do not agree with the high-income category as it does not reflect the reality on the ground.