Sri Lanka

Sri Lanka (orthographic projection)

An island nation in South Asia, Sri Lanka is the second wealthiest nation in the region (GDP in terms of purchasing power parity) after Maldives. The country has operated a free-market economy since 1977, before which socialism was driving the nation's economic policies. A significant portion of nation's labour force is employed in the service sector. Social inclusion, governance and stability are some of the challenges faced by the country. Sri Lanka is highly reliant on foreign assistance and in 2003 it received pledges totalling $4.5 billion from several financial institutions and countries. Since 2005 the country's per capita income has doubled with a fall in both poverty and unemployment. The country had a Gini coefficient of 0.36 in 2010 highlighting the drop in income inequality. To avert a balance of payment crisis, the country took a $1.5 billion bailout from the IMF in 2016. The nation's parliament, in response to the recommendations made under the IMF program, passed a new Island Revenue Act to introduce tax reforms. In the following year (2017), owing to improved human right conditions, the country was granted GSP plus facility by the European Union (EU) which enabled its firms to export products tax free to the region. The IMF in its fourth review highlighted the need to have a monetary policy which is prudent with efforts to increase the foreign reserves. The US, UK and India are the major export partners of the country whereas India and China are the major import partners. As compared to the other south Asian countries, Sri Lanka is ranked well above in the Human Development Index (HDI). The country has experienced budget deficits owing to high debt payments and distended civil service. A significant portion (79%) of this country's GDP accounts for government debt, which is the highest among the emerging markets. After the resolution of country's civil war, tourism experienced strong growth. By 2025, the government hopes to have transformed the island country into a knowledge-based export-oriented hub.

Its population in 2018 was 20,950,041 [1]

In 2015, 52.88% of its total energy
consumption was renewable [2]

In 2021, its GDP grew by 3.66% [2]

In 2021 it had a negative Current
Account Balance of US$bn 3.53 [3]

Its unemployment rate in 2021 was 5.30% [3]

Its Expenditure on R&D (as a percentage of
GDP) in 2018 was 0.13% [2]

A Big Mac will set you back the
local equivalent of US$3.18 [4]



What free trade areas or economic unions is it a member of?

None


What trade deals are there with other countries and economic unions?

Asia Pacific Trade Agreement (from 17/06/1976)

EU - Sri-Lanka Co-operation and Partnership Agreement (from 01/04/1995)

India - Sri Lanka free trade agreement (from 15/12/2001)

Pakistan - Sri Lanka free trade agreement (from 12/06/2005)

South Asian Free Trade Agreement (from 01/01/2006)


Trade with the United Kingdom

Source: UK Office for National Statistics, October 2019.

Contains public sector information licensed under the Open Government Licence v3.0.