Colombo: Sri Lanka’s economy recorded a significant recovery in 2024, expanding by 5% and surpassing forecasts, according to official data released on Tuesday. This marks a strong turnaround from the country’s worst financial crisis in decades.
The Department of Census and Statistics reported a 5.4% growth in the fourth quarter, reinforcing the country’s economic revival. The International Monetary Fund (IMF) had earlier predicted a 4.5% growth for 2024.
A sector-wise breakdown of the economy shows remarkable progress, with agriculture expanding by 8.3%, industrial output surging by 25.5%, and the services sector skyrocketing by 57.5% compared to the previous year.
The South Asian nation had faced a severe economic collapse in 2022, with a 7.3% contraction due to a foreign currency crisis, soaring inflation, and a historic debt default. The downturn continued into 2023, with the economy shrinking by 2.3%. However, the implementation of measures under a $2.9 billion IMF bailout secured in March 2023 played a crucial role in stabilizing the economy.
“Growth has exceeded all expectations,” said Raynal Wickremeratne, co-head of research at Softlogic Stockbrokers. He noted that Sri Lanka’s recovery has been faster than anticipated, though sustaining this momentum may be challenging.
In December 2023, Sri Lanka successfully renegotiated $25 billion in debt with international bondholders and bilateral creditors, including Japan, India, and China. The IMF, which recently approved the fourth tranche of $334 million under the bailout program, described Sri Lanka’s recovery as "remarkable."
Despite the positive economic turnaround, the IMF has emphasized the need for improved tax collection and fiscal discipline to achieve a primary surplus target of 2.3%. The organization projects Sri Lanka’s economic growth to moderate to 3% in both 2025 and 2026.
