January 09, Colombo (LNW): Having weathered what is considered the most severe economic crisis in its history, Sri Lanka is now on the path to recovery, with its financial sector regulator focusing on accelerating the country’s growth in 2025.
Central Bank Governor Dr. Nandalal Weerasinghe announced that the priority this year would be to achieve a “transformative acceleration” in the economy’s growth trajectory.
Dr. Weerasinghe emphasised the importance of this accelerated growth, stating that it is crucial not only for rebuilding the country’s economic strength but also for enhancing its debt-carrying capacity.
He stressed that strengthening the economy’s resilience and boosting growth without jeopardising financial and economic stability must be the next step for Sri Lanka’s ongoing progress.
“Our goal is to build sufficient buffers that will allow us to withstand future shocks while driving growth. This balance between stability and acceleration is essential for the country’s future,” Dr. Weerasinghe explained during a statement.
Reflecting on Sri Lanka’s economic journey over the past few years, the Governor noted that, following a turbulent period, the country had regained macroeconomic and financial sector stability.
However, he warned that maintaining this stability in the medium to long term depends on Sri Lanka’s continued commitment to implementing crucial economic reforms.
In his address, Dr. Weerasinghe reaffirmed the Central Bank’s role in maintaining domestic price stability and ensuring the financial system remains robust.
He also underlined the importance of supporting the economy as it works towards achieving its full growth potential.
Following the challenging years that saw the country grappling with an economic downturn, Sri Lanka’s economy began showing signs of recovery in the latter half of 2023.
This positive momentum carried into 2024, as the economy rebounded strongly, initially benefiting from the base effect of a low starting point. This recovery was further bolstered by an accommodative monetary policy and a favourable low-inflation environment.
According to estimates, Sri Lanka’s economy grew by 5.2% in the first three quarters of 2024, largely driven by expansion across key sectors. Encouragingly, leading indicators for the industrial and service sectors suggest that this growth trend continued into the final quarter of 2024.
Based on this performance, the Central Bank projects that Sri Lanka’s real GDP for 2024 will have increased by approximately 5%, marking the highest annual growth since 2017.
“This higher-than-expected growth also provides evidence that the recent period of deflation was not caused by a lack of demand, but rather by supply-side factors, including administrative price adjustments,” the Central Bank noted.
Looking ahead, Dr. Weerasinghe stressed that while Sri Lanka’s economic recovery has shown promise, the true challenge lies in sustaining and building upon this growth.
