Sri Lanka’s Economic Recovery Masks Lingering Poverty Challenges
Despite signs of stabilization in Sri Lanka’s economy, the latest update from the World Bank highlights persistent challenges related to poverty and inequality. While the country is projected to experience moderate growth in 2024, with declining inflation and a current account surplus, poverty rates have continued to rise for the fourth consecutive year.
The Sri Lanka Development Update underscores the complexity of the nation’s economic situation. On one hand, there are positive indicators such as increased revenues and a rebound in tourism, contributing to overall economic stability. However, these improvements have not translated into tangible benefits for a significant portion of the population.
According to the report, nearly 26% of Sri Lankans were living below the poverty line in 2023, with households facing multiple pressures including high prices, income losses, and underemployment. The closure of micro, small, and medium-sized enterprises (MSMEs) has exacerbated labor market concerns, particularly among women and in urban areas.
Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka, stressed the importance of sustained efforts to address the impact of the economic crisis on the most vulnerable segments of society. He emphasized the need for a comprehensive strategy that focuses on both maintaining macroeconomic stability and stimulating private investment to drive long-term growth and poverty reduction.
Looking ahead, the report projects modest growth in 2025, but warns of continued challenges including high debt service obligations and persistent poverty rates. Risks to the economic outlook remain, underscoring the importance of strong reform implementation to build a resilient economy that benefits all Sri Lankans.
