Sri Lanka Achieves First Annual Economic Growth Since Severe Crisis

Sri Lanka’s economy grew by 5.0% in 2024, marking its first annual expansion since the 2022 crisis. The last quarter recorded a growth of 5.4%. The growth is attributed to contributions from agriculture, industry, and services, with ongoing austerity measures in place. The IMF supports Sri Lanka’s recovery, expecting continued progress in 2025.

Sri Lanka’s economy has experienced a remarkable turnaround, recording a 5.0 percent growth in 2024. This marks the first full year of economic expansion since its severe economic crisis in 2022, as reported by official data. Notably, the country’s GDP grew by 5.4 percent in the last quarter of 2024, contrasting sharply with a contraction of 2.3 percent in 2023 and a 7.3 percent decline in 2022 due to a depletion of foreign exchange reserves, which hindered essential imports.

The Department of Census and Statistics credited the contributions of agriculture, industry, and services to this positive growth outcome. The economic challenges led to widespread protests in early 2022, which resulted in the ousting of former President Gotabaya Rajapaksa. His successor, Ranil Wickremesinghe, sought assistance from the International Monetary Fund (IMF), negotiating a $2.9 billion bailout package in 2023, implementing tax increases, subsidy cuts, and price hikes as part of the austerity measures.

Anura Kumara Dissanayake’s administration, which assumed power in September, has continued to uphold these austerity measures. Recently, the IMF board sanctioned the fourth tranche of the bailout, commending Sri Lanka’s strong program performance. IMF Deputy Managing Director Kenji Okamura stated that, “Reforms in Sri Lanka are bearing fruit, and the economic recovery has been remarkable,” while forecasting continued recovery into 2025.

In conclusion, Sri Lanka has achieved significant economic recovery in 2024, indicating a shift from the severe downturn experienced in previous years. The government’s commitment to austerity measures and structural reforms, in cooperation with the IMF, has contributed to this positive trajectory. As the economy grows, further optimistic prospects are anticipated for the future, aiming for sustained growth in 2025 and beyond.

Original Source: www.thenews.com.pk