📈 Sri Lanka’s Economic Recovery: Focus Shifts from Macro Headlines to Household Budgets

While Sri Lanka has made remarkable progress in restoring macroeconomic stability, a "cost-of-living recession" persists as permanently higher prices continue to pressure household budgets. • Macro Achievements vs. Micro Reality: Foreign exchange reserves have strengthened, inflation has retreated sharply from its peak (above 70%), and progress on sovereign debt restructuring has restored international confidence. However, cumulative inflation has severely eroded the purchasing power of wages for public servants, pensioners, and informal-sector workers. • Sector Overviews & Drivers: The recovery has depended heavily on tourism, worker remittances, and international financial assistance. True long-term prosperity and sustainable wage growth now require structural shifts toward higher productivity, advanced manufacturing, digital services, and knowledge industries. • Key National Outlook: Escaping the official poverty line has not guaranteed financial security, leaving many families fragile against economic shocks. Turning stability into prosperity by 2028 and beyond will depend on private sector investment in technology, stronger university-industry collaboration, and robust support for small and medium-sized enterprises (SMEs) to drive high-value exports.