From crisis to creativity: Rethinking economic resilience in Sri Lanka

OVER the past eight years, Sri Lanka has been hit by a series of severe crises that have tested the country’s resilience.

- By Dr. Nalin Abeysekera

Beginning with the Easter Sunday terror attacks, followed by the prolonged disruptions caused by the COVID-19 pandemic, the nation has now faced another major blow with Cyclone Ditwah. Striking in late November, the cyclone stands out as one of the most intense and destructive events in Sri Lanka’s recent history, affecting nearly two million people and about 500,000 families across all 25 districts. Livelihoods were disrupted, essential services damaged, and large parts of the economy came under pressure.

According to a Global Rapid Post-Disaster Damage Estimation (GRADE) report released by the World Bank Group, Cyclone Ditwah caused an estimated $4.1 billion in direct physical damage to buildings and contents, agriculture, and critical infrastructure—equivalent to almost four percent of Sri Lanka’s GDP. The social and economic impact has been equally serious. Research by the International Labour Organisation shows that up to 374,000 workers were employed in areas directly affected by floods and landslides. If these workers are unable to return to work or find suitable alternative employment, potential earnings losses could reach around $48 million per month. The agriculture and fisheries sectors have been especially hard hit, further weakening already vulnerable rural livelihoods.

Sri Lanka urgently needs a more resilient economy. Yet, for decades, such resilience has remained elusive due to a traditional mindset, weak governance structures, and policy capture by vested interests. The country continues to rely heavily on a narrow export base—tea, rubber, coconut, and garments—while global competition demands innovation, diversification, and value creation. What Sri Lanka needs today is not incremental change, but a clear paradigm shift in its economic thinking.