The Asian Development Bank (ADB) has released its annual flagship economic publication, the Asian Development Outlook (ADO) April 2024, projecting Sri Lanka’s economy to achieve moderate growth rates of 1.9% in 2024 and 2.5% in 2025. This forecast follows two consecutive years of economic contraction for the country.
According to the ADB, Sri Lanka is displaying signs of recovery, with positive developments emerging in the latter half of 2023. Key indicators such as inflation decelerating to single digits, the accumulation of foreign exchange reserves, and appreciation of the exchange rate signify progress. Additionally, there has been notable improvement in tourist arrivals, remittance inflows, and supply conditions.
The ADB’s growth projections rely on the continuation of reforms and an improvement in consumer and business confidence. The timely completion of external debt restructuring is also highlighted as crucial to bolstering Sri Lanka’s efforts towards debt sustainability.
Utsav Kumar, ADB’s Deputy Country Director for Sri Lanka, commended the country’s strides in implementing challenging policy reforms and stabilizing the economy in 2023. Kumar emphasized the importance of addressing the impact on vulnerable segments of society and sustaining reform efforts to address underlying crisis factors, thereby laying the groundwork for sustainable recovery and growth.
Despite the positive outlook, Sri Lanka faces significant challenges in addressing poverty vulnerabilities amid economic recovery. The COVID-19 pandemic and subsequent economic crisis have exacerbated poverty levels, necessitating targeted support for the most affected and vulnerable groups. Addressing high poverty rates and income inequality requires robust institutional and structural frameworks for inclusive social protection systems and the creation of sustainable job opportunities and livelihoods.
