By: Staff Writer
November 30, Colombo (LNW): Sri Lanka’s economy in late 2024 shows early signs of stabilization, though it remains fragile following a recent economic crisis.
The World Bank has revised its 2024 growth projections upward, with the GDP expected to expand by 4.4%. This improvement is primarily driven by growth in tourism, industrial production, and export-oriented activities.
However, domestic consumption remains weak, signaling that the recovery is largely externally driven.
Poverty levels continue to be a major concern, affecting over 20% of the population and expected to persist until 2026. On a positive note, the country has achieved a current account surplus, bolstered by remittances and tourism revenue. Inflation is projected to remain below the Central Bank’s target of 5% for 2024.
Despite these advances, Sri Lanka faces several challenges. High external debt, sluggish credit growth, and the need for structural reforms, including diversifying exports and attracting foreign investment, present significant risks. Growth for 2025 is projected at a modest 3.5%, constrained by the lingering effects of the crisis.
For sustainable long-term growth, unlocking the country’s estimated $10 billion annual export potential and increasing workforce participation, particularly among women, are identified as critical strategies.
Central Bank Governor Dr. Nandalal Weerasinghe expressed optimism about the country’s progress during the 59th Annual General Meeting of The Hotels Association of Sri Lanka (THASL).
He emphasized that both political and economic stability are now much improved under the current government. Dr. Weerasinghe highlighted the importance of political stability, achieved with the new leadership, as a cornerstone for steady and sustainable economic development.
The government has prioritized tourism as a key driver of economic recovery and long-term growth.
Dr. Weerasinghe reiterated the commitment to positioning Sri Lanka as a leading sustainable tourism destination globally, with the sector expected to play a pivotal role in foreign exchange earnings.
He described tourism not only as a short-term solution to financial challenges but also as a critical element in the country’s broader economic revival strategy.
Sri Lanka’s ambitious reform agenda supported by the IMF Extended Find Facility is delivering commendable outcomes.
The economy expanded on average by 4 percent y-o-y in the four quarters ending in June 2024. High-frequency indicators point to continued expansion across all sectors.
Average headline and core inflation remained contained at 0.8 and 3.8 percent during the third quarter. Gross official reserves increased to US$6.4 billion at end-October 2024 with sizeable foreign exchange purchases by the Central Bank. Public finances have strengthened following substantial fiscal reforms.
