Economy of Sri Lanka

The mixed economy of Sri Lanka was worth 27.60 LKR trillion ($84 billion) by gross domestic product (GDP) in 2023 and $318 billion by purchasing power parity (PPP). The country had experienced an annual growth of 6.4 percent from 2003 to 2012, well above its regional peers. This growth was driven by the growth of non-tradable sectors, which the World Bank warned to be both unsustainable and inequitable. Growth has slowed since then. In 2022, Sri Lanka faced a severe economic crisis, characterized by high inflation, and political instability. However, the country stabilized faster than expected in 2023 due to key economic reforms and fiscal discipline. By 2024, Sri Lanka re-entered the path of economic growth, with a renewed focus on sustainable development. Sri Lanka has met the Millennium Development Goal (MDG) target of halving extreme poverty and is on track to meet most of the other MDGs, outperforming other South Asian countries. Sri Lanka's poverty headcount index was 4.1% by 2016. Since the end of the three-decade-long Sri Lankan Civil War, Sri Lanka has begun focusing on long-term strategic and structural development challenges and has financed several infrastructure projects. High foreign debt, economic mismanagement under the governments of Gotabhaya and Mahinda Rajapaksa, and lower tourism revenue led to the country defaulting on its sovereign debt in April 2022. The economy contracted 7.8% in 2022, and the percentage of the population earning less than $3.65 a day doubled to around 25% of the population. On March 20, 2023, the IMF loaned US$3 billion to the country as part of a 48-month debt relief program.