The World Bank has revised its growth forecast for Sri Lanka, doubling its previous projection to a 4.4 percent expansion for 2024. This is a notable upswing in the country’s economic growth from its April estimate of 2.2 percent.
The bank attributed its positive forecast to the country’s improved outlook following four consecutive quarters of growth driven primarily by the industrial and tourism sectors along with critical structural and policy reforms.
“Sri Lanka’s economy has stabilised, with growth surpassing earlier forecasts. The recovery remains fragile and hinges on maintaining macroeconomic stability, successfully restructuring debt and continuing structural reforms to increase medium-term growth,” the World Bank said in a statement.
The bank in its latest development update further projected a slowdown in growth to 3.5 percent in 2025, with the economy expected to follow a modest path over the medium term due to the scarring effects of the economic crisis that has left a lasting impact.
The bi-annual update titled “Opening Up to the Future” also highlighted that poverty rates are anticipated to remain above 20 percent until 2026.
Inflation is expected to stay below the Central Bank’s target of 5 percent, but may gradually rise as demand increases over time. The current account is projected to remain in surplus driven by tourism revenues and remittances.
Recovery of the economy hinges on maintaining macroeconomic stability, the successful restructuring of country’ debt and continuing with structural reforms to increase medium-term growth.
According to the report, these reforms are crucial for boosting exports, attracting foreign investment and increasing female labour force participation to achieve inclusive and sustainable growth.
Moreover, the report emphasised that Sri Lanka must swiftly address key challenges such as poverty, food insecurity, financial sector vulnerabilities and labour market concerns to ensure long-term economic resilience.
(NR)