Escaping Poverty Is Not Enough: Inside East Asia’s Fragile Middle-Class Expansion

East Asia and the Pacific are often celebrated as the world's biggest development success story. Over the past four decades, the region lifted hundreds of millions of people out of extreme poverty, driven by rapid economic growth, export-led manufacturing, and mass job creation. A new World Bank study by researchers from the Poverty and Equity Global Department argues, however, that the region has entered a more difficult phase. The challenge today is no longer just escaping poverty, but achieving lasting economic security and building a stable middle class.

Redefining the middle class as security, not status

Rather than defining the middle class by income rankings or arbitrary global cutoffs, the study takes a practical approach: economic security. Using household surveys from 20 countries, the researchers identify the middle class as people living on roughly US$15 to US$56 per day (2021 purchasing power parity), an income range linked to a low risk of falling back into poverty. Below this sits a large "vulnerable" group, people who are no longer poor but remain one shock away from slipping back. This definition matters because it highlights not just who is better off today, but who is protected against tomorrow's risks.

A region split between progress and precarity

By 2021, just over one-third of the region's population qualified as middle class or upper income. Almost the same share still lived below the upper-middle-income poverty line, while another third remained vulnerable. In absolute terms, about 760 million people had reached middle-class living standards. But this headline masks deep imbalances. China accounts for much of the progress. Excluding China, fewer than one in four people in the rest of East Asia and the Pacific are middle class, and more than half remain poor by upper-middle-income standards. The region has made enormous gains, but economic security is far from universal.

Growth slowed, gains uneven

The past decade brought major advances. Poverty fell sharply between 2010 and 2021, and the middle class expanded faster in East Asia and the Pacific than in any other region of the world. China and Vietnam led the way, with middle-class populations growing rapidly. Elsewhere, progress has been slower. In countries such as Indonesia, the Philippines, Malaysia, and the Lao PDR, middle-class growth has stalled, suggesting deeper structural limits to productivity and job creation. The COVID-19 pandemic exposed these weaknesses, pushing many households back into vulnerability and showing how fragile recent gains can be.

Cities pull ahead, but poverty is urbanizing

Rural areas have seen dramatic poverty reduction over the past decade, reflecting long-term investments in agriculture, infrastructure, and market access. As a result, poverty is increasingly urban: nearly half of the region's poor now live in cities, up from about one-third a decade ago. Yet cities still offer better chances of upward mobility. By the early 2020s, around 44 percent of urban residents were middle class, compared with just 22 percent of rural residents. The shift is not mainly due to mass migration, but to income growth within both rural and urban areas, with cities pulling further ahead in terms of security and opportunity.

Jobs, services, and the social contract

Stable, well-paying jobs are the clearest path into the middle class. Poorer households remain concentrated in low-productivity agriculture and informal services, while middle-class workers are far more likely to hold salaried jobs in manufacturing or higher-value services. Education strongly improves these chances, especially at post-secondary levels, though it is not the only route upward. The study also warns of growing strains on the social contract. While access to basic services such as water and sanitation is high on average, gaps between economic classes remain large. In several countries, middle-class families are increasingly opting out of public education for private schools, weakening pressure to improve public services and reducing willingness to support them through taxes.

What comes next

The report's conclusion is sobering but clear. East Asia and the Pacific have largely solved the problem of extreme poverty, but not the problem of widespread economic insecurity. In a region facing slower growth, rapid aging, and rising climate risks, the future of the middle class will depend on better jobs, stronger skills, higher-quality public services, and a renewed commitment to an inclusive social contract. The next chapter of the region's development story will be harder than the last, but its success will matter even more.