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Asian Development Outlook (ADO) April 2024 Predicts Moderate Growth for Sri Lanka’s Economy

The Asian Development Bank’s (ADB) annual flagship economic publication, the  Asian Development Outlook (ADO) April 2024, forecasts a moderate growth of 1.9% in 2024 and 2.5% in 2025 for Sri Lanka’s economy after two consecutive years of contractions.

Sri Lanka is exhibiting signs of recovery, with green shoots emerging in the latter half of 2023. Inflation has decelerated to single digits, foreign exchange reserves are steadily increasing, and the exchange rate has appreciated. Additionally, tourist arrivals and remittance inflows depict commendable recovery, alongside improvements in supply conditions. The ADB’s growth forecast relies on the continuation of reforms and improved consumer and business sentiment. The timely completion of external debt restructuring is also expected to bolster Sri Lanka’s debt sustainability efforts.

Utsav Kumar, ADB Deputy Country Director for Sri Lanka, remarked, “Sri Lanka has made commendable progress in implementing difficult policy reforms and stabilizing the economy in 2023. We are pleased to see the results of these reforms, with signs of recovery emerging. It is critical that Sri Lanka addresses the impact on the poor and vulnerable and also continues to implement reforms to address the underlying causes of the crisis and lay the foundation for fostering sustainable recovery, building resilience, and reviving growth.”

The country faces a significant challenge in addressing poverty vulnerabilities amid economic recovery. The gains in poverty eradication made before the COVID-19 pandemic and the subsequent economic crisis have been eroded. As stability returns to the economy, it is imperative that Sri Lanka ensures support for the most affected and vulnerable groups, and tackles high poverty incidence and income inequality. This necessitates appropriate institutional and structural frameworks for an inclusive social protection system with enhanced targeting. Creating employment opportunities and promoting sustainable livelihoods will be crucial steps towards poverty alleviation.

ADB remains dedicated to realizing a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while persisting in efforts to eliminate extreme poverty. Established in 1966, it is owned by 68 members, with 49 from the region.

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