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Sri Lanka economy snapshot

2020

Updated June 2020

Sri Lanka's economy is consistently under-performing compared to its peers

Sri Lanka’s real GDP growth rate stood at 3.2% in 2019, down from 3.3% in 2018, with growth now having fallen for four consecutive years. Economic growth has also been below the developing-country average since 2016.

Source: World Bank

Low growth has seen GDP per capita fall for the first time in decades

Living standards fell in Sri Lanka for the first time since 2001, according to GDP per capita declining from 4,081 in 2018 to $3,853 in 2019. Consistent with the observed trends in growth, the fall of Sri Lanka’s per capita GDP contrasted that of most other developing countries, and in particular those in East Asia. Indeed, Sri Lanka now lags countries like China and Thailand by a considerable margin which has grown over the past two decades.

Source: World Bank

Sri Lanka's share of global and regional exports has been static

Sri Lankan exports, which are still primarily geared towards textiles and garments, are still where they were 20 years ago in terms of their share of global exports, at 0.06%. In the South Asian region, Sri Lankan exports have lost a substantial share since the start of the millennium with little improvement over the past 5 years.

Source: Central Bank of Sri Lanka

Source: World Bank

Sri Lankan equities' performance has been disappointing compared to the rest of the world

Sri Lankan equities gained a mere 0.5% in $ terms in 2019. Equities are still down 40% from where they were 5 years ago, while emerging markets and frontier markets have fared much better over the same period. The sharpest contrast is perhaps with Vietnam, which has had one of the best performing equity markets over the past 3 years.

Source: MSCI

Persistent outflows on the current account are compensated for by capital inflows

Consistent deficits on the trade account over the past two decades have dragged down the current account balance. The lack of exports growth however, is being offset somewhat by earnings from tourism, which have risen significantly since 2010. The overall balance of payments has remained in positive territory for most of the years due to capital inflows, most recently due to FDI inflows.

Source: Asian Development Bank, Central Bank of Sri Lanka

Inflation up marginally but downward trend remains

Sri Lanka’s rate of consumer price inflation has fallen steadily over the past 30 years along with global consumer price inflation. While inflation has been rising over the past few years, much of the overall trend will depend on the direction of global prices.

Source: World Bank