ADB Forecasts Modest Growth for Sri Lanka in 2024-2025 Amid Economic Recovery Efforts
April 12, Colombo (LNW): The Asian Development Bank (ADB) released its Asian Development Outlook (ADO) for April 2024, projecting that Sri Lanka will experience moderate economic growth of 1.9 percent in 2024 and 2.5 percent in 2025 after enduring two consecutive years of economic downturn.
According to the ADB report, Sri Lanka is beginning to see the early signs of economic recovery. “In the latter half of 2023, the economy showed green shoots of recovery. Inflation has slowed to single digits, foreign exchange reserves are being replenished, and the national currency has appreciated,” stated the ADO.
The report highlights strong rebounds in tourism and remittances as key factors supporting the recovery. The outlook for continued economic growth is dependent on Sri Lanka’s adherence to ongoing reforms and improved sentiment among consumers and businesses. Effective completion of external debt restructuring is also vital to enhance the country’s debt sustainability.
ADB Deputy Country Director for Sri Lanka, Utsav Kumar, remarked on the nation’s progress: “Sri Lanka has achieved notable success in implementing challenging policy reforms and stabilizing its economy throughout 2023. We are encouraged by the emerging signs of recovery. However, it remains crucial for the country to mitigate the socioeconomic impacts on its poorest and most vulnerable populations and to persist with reforms that tackle the root causes of the crisis to support a sustainable recovery and growth.”
The ADO also underscores the challenges of addressing poverty and inequality exacerbated by the COVID-19 pandemic and subsequent economic issues. As the economy gains stability, Sri Lanka is tasked with supporting the most impacted and vulnerable communities, thereby reducing high poverty rates and income disparities. This necessitates the establishment of effective social protection systems with better targeting, alongside efforts to create job opportunities and promote sustainable livelihoods to alleviate poverty.
