Growth imperative: Sri Lanka's path to prosperity

The World Bank's latest projections deliver a sobering warning: Sri Lanka's economy is set to grow at a sluggish 3.5% in 2025, slipping to 3.1% in 2026.

- BY PROFESSOR CHANAKA JAYAWARDHENA

For a nation still scarred by the 2022 economic crisis, such anaemic growth threatens prolonged hardship, failing to deliver the jobs, poverty reduction, or stability Sri Lankans need.

Meanwhile, India, our regional neighbour, is projected to achieve robust growth of 6.3% to 6.8% over the same period. Sri Lanka must aim to match this momentum, targeting at least 6.5% growth to transform its economic future. This demands a national commitment to faster growth through a dynamic work culture, modernised labour policies, and a skilled, inclusive workforce. The time for half-measures is over—Sri Lanka must act boldly to ignite rapid economic progress.

The Cost of Stagnation

The World Bank's forecast of 3.5% growth in 2025 and 3.1% in 2026 signals a dangerous trajectory. At this pace, Sri Lanka risks a vicious cycle of economic fragility, with insufficient investment to spur job creation, persistent unemployment, and stagnant wages. Youth unemployment, at 25% in 2024, could worsen, fuelling frustration and social unrest. Rural communities, reliant on agriculture and remittances, face declining incomes, exacerbating inequality and limiting access to healthcare and education. Women, who make up 35% of the workforce, are disproportionately affected, with many trapped in low-paying, informal jobs, perpetuating gender disparities. Small businesses, employing over 45% of the workforce, struggle under high costs and low demand, stifling entrepreneurship.