📈 Sri Lanka’s Economic Outlook: Balancing Recovery & Stability

Sri Lanka continues its trajectory toward economic stability, navigating post-default recovery while addressing systemic governance and climate-related shocks. Based on current reporting, the following breakdown highlights the national economic standing: • Macro-Economic Performance: The economy grew by 5.0% in 2024, a significant rebound from the -9.5% contraction seen between 2021-2023. Inflation reached temporary deflationary territory in late 2024 (approx. -1.7%) before stabilizing. • Fiscal & Debt Status: Public debt stands at approximately 102.4% of GDP as of end-2024. Despite the US$ 51 Bn debt default in 2022, the primary surplus reached 2.2% of GDP, surpassing IMF targets. The IMF recently provided US$ 206 Mn via the Rapid Financing Instrument (RFI) for disaster relief. • Sector Highlights & Reforms: • Apparel & Textiles: Remains a cornerstone for foreign exchange, though trade-related uncertainties persist. • Tourism: Significant turnaround with 2025 arrivals expected to reach an all-time high of 2.5 Mn. • Automotive: The government officially lifted the 2020 import ban on vehicles in February 2025, implementing a staged re-opening to boost customs revenue. • Governance & Risks: Sri Lanka’s Corruption Perception Index (CPI) rank improved to 107th in 2025 (up 14 places). However, Cyclone Ditwah (Nov 2025) caused an estimated US$ 4.1 Bn in direct damage, equivalent to 4% of GDP, impacting infrastructure and agriculture. _Note: Summary based on provisional 2025-2026 economic data and reports._