Tourism surge sparks economic revival in Sri Lanka, Q4 data shows

WEB DESK: Sri Lanka’s economy showed a remarkable recovery in the fourth quarter of 2023, following the severe financial challenges the island nation faced. According to the government’s announcement on Saturday, this resurgence was fueled by an increase in tourism arrivals.

The Census and Statistics Department reported that agriculture, industries, and services collectively contributed to a 4.5 per cent expansion in the December quarter. This positive growth contrasts with a significant 12.4 per cent contraction observed in the same period the previous year.

However, despite this encouraging quarter, the overall performance for 2023 indicates a 2.4 per cent shrinkage compared to the previous year’s 7.8 per cent contraction. This downturn in 2022 was marked by the country’s default on its $46 billion foreign debt.

Describing the economic trajectory of 2023, the department highlighted a dual pattern, with negative growth recorded in the first half of the year followed by a robust recovery in the latter half. The resurgence was notably supported by a surge in tourism towards the year’s end, along with improvements in worker remittances.

In December, the number of tourists visiting Sri Lanka soared to 210,000, more than doubling from the 91,900 recorded the previous year. Currently, Sri Lanka is accessing a four-year $2.9 billion bailout loan from the International Monetary Fund and engaging in discussions with foreign creditors for debt restructuring.

Reflecting on the economic turmoil of 2022, the country grappled with severe shortages of food, fuel, and pharmaceuticals due to depleted foreign exchange reserves. Civil unrest ensued, leading to the ousting of then-President Gotabaya Rajapaksa in July of that year.

Since taking office, his successor, Ranil Wickremesinghe, has implemented measures to stabilise state revenue, including tax increases, the removal of energy subsidies, and adjustments in essential commodity prices.