COLOMBO – Sri Lanka’s economic recovery remains slow and uneven, with many citizens still struggling to rebuild their lives after the country’s worst-ever financial crisis in 2022, the World Bank said on Tuesday. The institution highlighted that while some indicators show progress, the overall recovery remains incomplete and fragile.
In its latest review, the World Bank projected that Sri Lanka’s economic growth would slow to 4.6 percent in 2025 and 3.5 percent in 2026, compared to 5 percent recorded last year. This slowdown reflects weak consumer demand, limited job opportunities, and the lasting effects of austerity measures introduced to stabilize the economy.
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The World Bank’s representative for Sri Lanka, David Sislen, stated that poverty has declined but still remains twice as high as in 2019. He added that around 10 percent of Sri Lanka’s 22 million people live just above the poverty line, facing daily struggles due to high costs of living and slow job recovery.
Moreover, the report noted that malnutrition continues to affect vulnerable populations, particularly children and women, as food prices remain elevated. Despite recent stabilization, many households have not yet regained the incomes and assets they lost during the 2022 economic collapse, when public protests forced former president Gotabaya Rajapaksa to resign.
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The country defaulted on its $46 billion foreign debt in April 2022 and later secured a $2.9 billion bailout from the International Monetary Fund to restore financial discipline. The current government under President Anura Kumara Dissanayake has maintained many of the tough tax and spending policies introduced by its predecessor to meet IMF targets and avoid another crisis.