Sri Lanka is an island country nestled in the subcontinent of South Asia, with a population of 21.7 million people. In terms of the Sri Lankan economy, has shown much growth in recent years. Classified as an upper-middle-income level country, it is the second wealthiest country in the subcontinent. Wherein, it falls behind Maldives in this regard. This is due to their nominal GDP per capita being valued at $4,099.
Technically speaking, it is a “developing/emerging” economy. This is defined as the Sri Lankan economy that is working on increasing its capacity for production. This is especially so in countries that used to heavily rely on raw materials as a source of revenue. But in recent decades, Sri Lanka has made a niche in the market for textile and apparel exports.
In terms of the Human Development Index, Sri Lanka has a value of 0.770. This means that the country has a high standard of living. As a result, the unemployment rate of the country has remained consistently low. Where it is at 4.4% of the labor force. As of current records, Sri Lanka has an economic score of 56.4. This places as the 115th Sri Lankan economy in the world in terms of freedom. Reflectively, its ease of doing business rank is number 100 out of 180 countries.
In addition to these improvements, the country is also a part of several trade unions. As such, trade with neighboring countries has flourished.
Currently, Sri Lanka is the 63rd wealthiest country in the world in terms of GDP. The latter of which stands at a value of $88.901 billion. Their export industry is valued at $15 billion. In contrast, the import industry is valued at $20.98 billion. This leaves them at a negative trade balance. This can be attributed to the types of products the country exports in relation to what it imports. Sri Lanka’s exports still tend to be raw materials such as food items (tea, spices) and products such as textiles/ apparel. This is in stark contrast to their imports of machinery and petroleum products.
In terms of currency, Sri Lanka uses the Sri Lankan Rupee. Which, when against the US dollar coverts to LKR 181.66 to one dollar.
In terms of business communication, Sri Lanka uses English for all its business transactions. English is also an official language of the country, alongside Sinhala and Tamil. As such, all official and government proceedings are conducted in English as well.
Sri Lanka has a bustling entrepreneurial scene. Where it is reported that almost two-thirds of the country’s businesses are small and medium enterprises.
But perhaps what puts Sri Lanka on the global map is its tourism industry. Generating revenue of $4.3 billion, with almost 2.3 million visitors coming into the country. These numbers are predicted to increase.
However, Sri Lanka’s economy has been hitting reportedly low growth rates for its. For the post-war years of 2010-2014, the country enjoyed a high annual growth rate of 7.4%. However, after the 2014 presidential elections, the country’s growth rate took a fall to 5% in 2015. The change in the government maintained a consistently low growth rate in the coming years. While Sri Lanka is very receptive to foreign direct investment, it dropped in 2019. This is after the terror attacks of April 2019 occurred. Thus, causing the growth rate plummeted to a disastrous 2.5%. This is because racial tensions in the country were re-ignited, making foreign investors weary of conducting business here. However, as of the September census, the growth rate is expected to rise to 3% before the end of the year is out. As the country is going to have a change of government in 2019 due to the presidential elections, the growth rate is expected to increase further as a result. However, this is dependent on whether political and racial peace will be achieved. As much of the foreign investors are deterred by this fact. Moreover, one of the country’s leading industries also plummeted severely in 2019.
The tourism industry started strong in 2019 with a revenue of $458.4 million in January through March. However, after April 2019, it fell to a low of $313 million. In terms of tourist arrivals, February saw a high with 252,033, which dropped to 166,975 in April. This fell to an extreme low in June with 37,802 visitors. Fortunately, the rates have picked up again and in August 143,587 tourists arrived in Sri Lanka. Reporters now predict these numbers will see a rise as the holiday season of November and December looms. To conclude, Sri Lanka has a developing economy. While growth rates have been high, they have taken a fall due to racial and political tensions. However, there is a chance of this changing if peace is restored with the new government in place.