How to group flat xml into 2 levels in xslt 2.0

Question

I have an almost flat xml with several entries having info related to headings which are to be displayed before the entries' metadata. These headings can be in two levels and second level is optional. Kindly suggest a way to achieve that.

Input xml:

<world>

 <country>
  <name>USA</name>
  <code>001</code>
  <category type="developed" scheme="level1"/>
  <category type="rich" scheme="level2"/>
 </country>
 <country>
  <name>UK</name>
  <code>044</code>
  <category type="developed" scheme="level1"/>
  <category type="rich" scheme="level2"/>
 </country>
 <country>
  <name>LATVIA</name>
  <code>371</code>
  <category type="developed" scheme="level1"/>
 </country>
 <country>
  <name>BHUTAN</name>
  <code>975</code>
  <category type="developing" scheme="level1"/>
 </country>

</world>

Desired Output:

<world>
  <developed>
    <rich>
      <country>
        <name>USA</name>
        <code>001</code>
      </country>
      <country>
        <name>UK</name>
        <code>044</code>
      </country>
    </rich>
    <country>
      <name>LATVIA</name>
      <code>371</code>
    </country>

  </developed>
  <developing>
    <country>
      <name>BHUTAN</name>
      <code>975</code>
    </country>
  </developing>
</world>

Answer 1

Nest two for-each-group:

<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
    xmlns:xs="http://www.w3.org/2001/XMLSchema"
    exclude-result-prefixes="xs"
    version="2.0">

<xsl:output indent="yes"/>

<xsl:template match="world">
  <xsl:copy>
    <xsl:for-each-group select="country" group-by="category[@scheme = 'level1']/@type">
      <xsl:element name="{current-grouping-key()}">
        <xsl:for-each-group select="current-group()[category[@scheme = 'level2']]" group-by="category[@scheme = 'level2']/@type">
          <xsl:element name="{current-grouping-key()}">
            <xsl:apply-templates select="current-group()"/>
          </xsl:element>
        </xsl:for-each-group>
        <xsl:apply-templates select="current-group()[not(category[@scheme = 'level2'])]"/>
      </xsl:element>
    </xsl:for-each-group>
  </xsl:copy>
</xsl:template>

<xsl:template match="country">
  <xsl:copy>
    <xsl:copy-of select="* except category"/>
  </xsl:copy>
</xsl:template>

</xsl:stylesheet>