The term third world is often used incorrectly. It was created during the cold war to refer to countries that we're not in alliance with one of the dominant super powers (USA, USSR). [1]
People often use when they want to say "backwards" countries.
The correct term is developing world, which just means rapidly improving and doesn't cloudy the convo with connotations about the cold war.
[1] https://www.usnews.com/news/best-countries/sri-lanka