📈 Sri Lanka’s Spatial Divide: Why Growth Must Move Beyond Colombo

A new study by economist Umesh Moramudali for the Neelan Tiruchelvam Trust highlights that Sri Lanka’s economic model has historically over-favoured the Western Province, creating a deeply uneven growth pattern that contributed to the 2022 sovereign default. • The Colombo Monopoly: For decades, the Western Province has generated nearly 40% of Sri Lanka's GDP, centralizing foreign investment, industries, and high-paying professional jobs while leaving other provinces to stagnate. • Labor & Informal Sector: By 2018, nearly 60% of Sri Lankan workers were trapped in the informal sector (agriculture, small-scale businesses, and casual services) characterized by low wages, zero retirement benefits, and severe vulnerability during crises. • Past Policy Failures: Previous initiatives like the Regional Economic Advancement Programme (REAP) and rural garment factory schemes failed long-term because they over-indexed on basic infrastructure rather than sustainable enterprise, skills training, or localized job creation. • Socioeconomic Costs: Lack of regional opportunities forces rural graduates to migrate to Colombo, driving up urban housing costs. It heavily disadvantages women, informal workers, and conflict-affected communities in the North and East. • Path to Inclusive Growth: The study recommends empowering provincial councils for bottom-up development, linking large firms with rural SMEs, building peripheral economic hubs, expanding interregional business networks, and tying social safety nets (like Aswesuma) to economic empowerment.