Asia Edge: Income milestones and inflation surprises

Research evidence excerpt

Asia Edge: Income milestones and inflation surprises

Mahmoud Harb (65) 6882-1640 Asia Pacific Economic Research J P M O R G A Nmahmoud.harb@jpmorgan.com

JPMorgan Chase Bank, N.A., Singapore Branch 03 July 2026

Figure 1: GNI per capitaAsia Edge: Income

%oya Vietnam Sri Lanka

milestones and inflation 10

surprises 5

Mahmoud Harb 0

-5

This is an overview of key economic and market-relevant

developments in Asia Edge economies. It is part of the our -10

weekly EM Edge Data Watch link 16 17 18 19 20 21 22 23 24 25

Source: World Bank, J.P. Morgan

Sri Lanka and Vietnam climb one notch in

Sri Lanka: A food-led inflation surprisethe development ladder

Headline inflation, measured by the change in the ColomboThe World Bank upgraded Sri Lanka and Vietnam from low-

Consumer Price Index, surged to 6.8% in June, its highester-middle-income to upper-middle-income status in its

level in three years, from 5.5% in May (Figure 2). This wasFY2027 country income classification released on July 1. The

well above our forecast of 5.5% and consensus of 5.8%. Thedecision reflects sustained gains in gross national income per

acceleration was narrow in scope and largely reflected a sharpcapita in recent years and does not constitute a broader judg-

monthly shock in food prices, alongside higher retail fuelment on economic development or policy quality. Still, the

prices. Core inflation, which excludes fresh food, energy,classification has important symbolic value, signaling higher

transport, rice and coconut, ticked higher to 4.0% from 3.9%income levels and improved resilience after years of stellar

in May and rose by a trend-like 0.4% m/m on a seasonallygrowth in Vietnam and post-crisis recovery in Sri Lanka.

adjusted basis.

For Sri Lanka, the upgrade marks a milestone in its recovery.