Sri Lanka Economic Outlook
A country emerging from economic collapse:
Sri Lanka’s economy has seen economic crisis in recent years, marked by a sovereign debt default in 2022—the first in its history. The country faced severe shortages of fuel, food, and medicine due to depleted foreign exchange reserves, leading to mass protests and political upheaval. While emergency measures have provided some stability, the road to recovery remains long and uncertain.
Tourism and remittances as key economic drivers:Before the crisis, tourism was a major contributor to Sri Lanka’s economy, accounting for a significant share of foreign exchange earnings. However, the COVID-19 pandemic and domestic instability severely impacted visitor numbers. Remittances from Sri Lankans working abroad have helped cushion the crisis, but they remain insufficient to cover the country’s external liabilities.
Debt restructuring and IMF intervention:Sri Lanka has entered into a bailout program with the IMF, seeking debt restructuring agreements with creditors. The government has implemented fiscal consolidation measures, including tax hikes and spending cuts, to restore macroeconomic stability. However, these austerity measures have increased economic hardship for many citizens, leading to social discontent.
Sri Lanka’s economic outlook:While short-term stabilization measures are in place, long-term recovery in Sri Lanka’s economy depends on restoring investor confidence, restructuring debt, and reviving key sectors such as tourism and agriculture. Implementing governance reforms, improving public sector efficiency, and attracting foreign investment will be critical to preventing future economic crises and ensuring sustainable growth.
Sri Lanka's Macroeconomic Analysis:
Nominal GDP of USD 99.0 billion in 2024.
Nominal GDP of USD 84.3 billion in 2023.
Nominal GDP of USD 99.0 billion in 2024.
GDP per capita of USD 4,469 compared to the global average of USD 10,589.
GDP per capita of USD 3,824 compared to the global average of USD 10,589.
GDP per capita of USD 4,469 compared to the global average of USD 10,589.
Average real GDP growth of 1.7% over the last decade.
Average real GDP growth of 1.7% over the last decade.
Average real GDP growth of 1.5% over the last decade.
Sector Analysis
In 2022, services accounted for 59.9% of overall GDP, manufacturing 17.9%, other industrial activity 13.9%, and agriculture 8.3%. Looking at GDP by expenditure, private consumption accounted for 69.3% of GDP in 2023, government consumption 6.9%, fixed investment 25.3%, and net exports -1.5%.International trade
In 2023, manufactured products made up 67.3% of total merchandise exports, mineral fuels 3.2%, food 25.7%, ores and metals 0.6% and agricultural raw materials 3.2%, with other categories accounting for 0.0% of the total. In the same period, manufactured products made up 56.5% of total merchandise imports, mineral fuels 24.8%, food 15.4%, ores and metals 1.4% and agricultural raw materials 1.5%, with other goods accounting for 0.4% of the total. Total exports were worth USD 12.80 billion in 2024, while total imports were USD 18.80 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 1.5% in the decade to 2023. To read more about GDP growth in Sri Lanka, go to our dedicated page.
Fiscal policy
Sri Lanka's fiscal deficit averaged 7.7% of GDP in the decade to 2024. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 4.6% in the decade to 2023. For more information on Sri Lanka's unemployment click here.
Inflation
Inflation averaged 8.9% in the decade to 2024. Go to our Sri Lanka inflation page for extra insight.
Monetary Policy
Sri Lanka's monetary policy rate ended 2024 at 8.00%, on the same level as a decade earlier. See our Sri Lanka monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the rupee weakened by 55.2% vs the U.S. dollar. For more info on the rupee, click here.
Economic situation in Sri Lanka
GDP grew 4.4% year on year in Q1, according to data released in mid-June. This was roughly in line with the 4.3% expansion expected by our panelists. However, it is still a six-quarter low, and GDP remains lower than before the 2022–2023 balance of payments crisis. In Q1, the industrial sector—which makes up about 25% of GDP—grew at the weakest pace in a year and a half and remained about 10% below its pre-crisis size. The crisis may have scarred the sector, with workers emigrating due to low wages and machinery falling into disrepair as firms curtailed output. More positively, services output—which accounts for 60% of GDP—rose at the joint-quickest speed in over three years and already tops its pre-crisis size. Turning to Q2, GDP growth is seen dipping further, with manufacturing activity shrinking and services output slowing in April–June, according to the PMI.Sri Lanka Economic Forecasts
Projections out to 2034.48 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 17 expert analysts.
Want to get insight on the economic outlook for Sri Lanka in the coming years? FocusEconomics collects projections out to 2034 on 48 economic indicators for Sri Lanka from a panel of 17 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Sri Lanka economy. To download a sample report on the Sri Lanka's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.