Sri Lanka economy under recovery, expected to grow at 4.4% in 2024: WB

Poverty is expected to gradually decline but remain above 20 per cent until 2026. Inflation is likely to stay below the central bank’s target of 5 per cent in 2024, gradually increasing as demand picks up. The current account is projected to remain in surplus in 2024, driven by tourism and remittances. This positive outlook follows four consecutive quarters of growth driven by the industrial and tourism sectors and supported by critical structural and policy reforms.

The recovery remains fragile and hinges on maintaining macroeconomic stability, successfully restructuring debt, and continuing structural reforms to increase medium-term growth and reduce poverty, as per the World Bank’s bi-annual Sri Lanka Development Update, titled ‘Opening Up to the Future’. The key reforms aimed at boosting exports, attracting foreign investment, enhancing female labour force participation, improving productivity, and addressing challenges such as poverty, food insecurity, and vulnerabilities in the financial sector are crucial for achieving more inclusive and sustainable growth.

The report underscores the country's potential for achieving higher and sustainable growth through trade. Sri Lanka has an untapped export potential estimated at $10 billion annually, which could create approximately 142,500 new jobs. There is significant opportunity for diversifying and expanding exports in manufacturing, services and agriculture, provided the necessary reforms are implemented.

David Sislen, World Bank regional country director for Maldives, Nepal, and Sri Lanka, said, "Sri Lanka's recent economic stabilisation, marked by four quarters of growth and a current account surplus in 2023, is a significant milestone. At this moment, Sri Lanka has a real opportunity to realise its export potential, which we estimate at $10 billion annually. There is an opening for Sri Lanka to deepen its participation in global value chains and take advantage of its geography and an evolving global landscape to generate jobs and sustain growth. The continued implementation of important economic and governance-related reforms will allow Sri Lanka to fully benefit from this moment."

Fibre2Fashion News Desk (SG)