Sri Lanka Economy - 2022

GEOGRAPHICAL NAMES 

Economic overview

Sri Lanka’s economy has historically relied upon government-guided market investments, and since 2009, several sectors have been excluded from any privatization efforts. Major infrastructure development of rural and civil war-impacted areas remains a major focus, as does small business development. Sri Lanka’s longstanding high debt and large civil service have contributed to historically high budget deficits and remain a concern. Sri Lankan tourism soared since the end of conflict with the Liberation Tigers of Tamil Eelam, but the 2018 constitutional crisis, the 2019 Easter bombings, and the ongoing COVID-19 pandemic have since destabilized this key industry, leading Sri Lanka to nearly expend all foreign currency reserves. Regionally, Sri Lanka has engaged China on major infrastructure projects and currently owes $6.5 billion, which may soon be restructured.

Fiscally, Sri Lanka’s focus on domestic goods—instead of export growth—further increased Sri Lanka’s trade imbalance, despite its EU preferential trade status allowing tax-free garment and gem exports to the EU. From 2019 until its repeal in 2021, Sri Lanka’s agricultural import ban on chemical fertilizers resulted in disastrous reductions in rice, tea, and rubber yields, increasing Sri Lanka’s import dependencies for these goods. The ongoing Russo-Ukrainian War has also decreased fuel supplies and significantly increased prices. India is providing both direct fertilizer and fuel aid to offset these shortages. Power shortages plague business climates, and further stoke existing labor shortages. Additionally Sri Lanka is also considering privatizing several state-owned entities to try to spur industrial and service sectors’ growth.

Monetarily, Sri Lanka remains in a dire position, further exacerbated by the 2019 tax cuts that contributed to the country’s ongoing economic calamity. Already one of the highest indebted emerging markets, Sri Lanka defaulted on its current public debt payments in May 2022, and its ongoing currency crisis has crippled domestic revenues, tax collections, and economic activity, ushering in the country’s worst economic crisis since independence in 1948. As a result, inflation is skyrocketing (nearing 40%), and food, fuel, and medicine shortages have led to widespread unrest and economic collapse. Sri Lanka currently seeks an immediate $3 million IMF bridge loan and $75 million in foreign currency to pay for essential goods and fuel.The World Bank, India, and the G7 countries have agreed to aid Sri Lanka in securing debt relief, but the IMF maintains that Sri Lanka must raise interest rates and taxes to secure any loan.

Current Sri Lankan priorities focus on the following goals:

• Securing a bridge loan from the IMF;
• Improving its foreign currency reserves through continued promotion of tourism and privatization of state enterprises;
• Recovering from COVID-19 pandemic-related economic disruptions and demand shocks;
• Identifying alternative fuel supply chains; and
• Restructuring preexisting infrastructure debts to China.

Real GDP (purchasing power parity)

$274.8 billion (2020 est.)

$284.97 billion (2019 est.)

$278.68 billion (2018 est.)

note: data are in 2017 dollars

Real GDP growth rate

2.29% (2019 est.)

3.32% (2018 est.)

3.58% (2017 est.)

Real GDP per capita

$12,500 (2020 est.)

$13,100 (2019 est.)

$12,900 (2018 est.)

note: data are in 2017 dollars

GDP (official exchange rate)

$84.016 billion (2019 est.)

Inflation rate (consumer prices)

4.3% (2019 est.)

4.2% (2018 est.)

6.5% (2017 est.)

Credit ratings

Fitch rating: CCC (2020)

Moody's rating: Caa1 (2020)

Standard & Poors rating: CCC+ (2020)

note: The year refers to the year in which the current credit rating was first obtained.

GDP - composition, by sector of origin

agriculture: 7.8% (2017 est.)

industry: 30.5% (2017 est.)

services: 61.7% (2017 est.)

GDP - composition, by end use

household consumption: 62% (2017 est.)

government consumption: 8.5% (2017 est.)

investment in fixed capital: 26.3% (2017 est.)

investment in inventories: 10.2% (2017 est.)

exports of goods and services: 21.9% (2017 est.)

imports of goods and services: -29.1% (2017 est.)

Agricultural products

rice, coconuts, sugar cane, plantains, milk, tea, cassava, maize, poultry, coir

Industries

processing of rubber, tea, coconuts, tobacco and other agricultural commodities; telecommunications, insurance, banking; tourism, shipping; clothing, textiles; cement, petroleum refining, information technology services, construction

Industrial production growth rate

4.6% (2017 est.)

Labor force

8 million (2020 est.)

Labor force - by occupation

agriculture: 27%

industry: 26%

services: 47% (31 December 2016)

Unemployment rate

4.83% (2019 est.)

4.44% (2018 est.)

Youth unemployment rate (ages 15-24)

total: 21%

male: 17.1%

female: 28.1% (2019 est.)

Population below poverty line

4.1% (2016 est.)

Gini Index coefficient - distribution of family income

39.8 (2016 est.)

46 (1995)

Household income or consumption by percentage share

lowest 10%: 3%

highest 10%: 32.2% (2012 est.)

Budget

revenues: 12.07 billion (2017 est.)

expenditures: 16.88 billion (2017 est.)

Budget surplus (+) or deficit (-)

-5.5% (of GDP) (2017 est.)

Public debt

79.1% of GDP (2017 est.)

79.6% of GDP (2016 est.)

note: covers central government debt and excludes debt instruments directly owned by government entities other than the treasury (e.g. commercial bank borrowings of a government corporation); the data includes treasury debt held by foreign entities as well as intragovernmental debt; intragovernmental debt consists of treasury borrowings from surpluses in the social funds, such as for retirement; sub-national entities are usually not permitted to sell debt instruments

Taxes and other revenues

13.8% (of GDP) (2017 est.)

Fiscal year

calendar year

Current account balance

-$10 million (2019 est.)

-$17 million (2018 est.)

Exports

$19.41 billion (2019 est.) note: data are in current year dollars

$20.26 billion (2018 est.) note: data are in current year dollars

$15.166 billion (2017 est.)

Exports - partners

United States 24%, India 8%, United Kingdom 7%, Germany 7% (2019)

Exports - commodities

clothing and apparel, tea, used tires, rubber products, precious stones, cinnamon (2019)

Imports

$24.56 billion (2019 est.) note: data are in current year dollars

$26.84 billion (2018 est.) note: data are in current year dollars

$26.063 billion (2017 est.)

Imports - partners

India 24%, China 23%, Singapore 7%, United Arab Emirates 6%, Malaysia 5% (2019)

Imports - commodities

refined petroleum, textiles, gold, cars, broadcasting equipment (2019)

Reserves of foreign exchange and gold

$7.959 billion (31 December 2017 est.)

$6.019 billion (31 December 2016 est.)

Debt - external

$55.332 billion (2019 est.)

$52.567 billion (2018 est.)

Exchange rates

Sri Lankan rupees (LKR) per US dollar -

185.8 (2020 est.)

181.2 (2019 est.)

178.545 (2018 est.)

135.86 (2014 est.)

130.57 (2013 est.)

NOTE: The information regarding Sri Lanka on this page is re-published from the 2022 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Sri Lanka 2022 information contained here. All suggestions for corrections of any errors about Sri Lanka 2022 should be addressed to the CIA or the source cited on each page.