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The Sri Lankan economy rebounded in 2023 following its worst post-Independence downturn, according to the Central Bank's Annual Economic Review. Decisive policy adjustments and structural reforms spearheaded by the government and Central Bank restored macroeconomic stability, with inflation contained to single digits by year-end, marking the beginning of monetary policy normalization. Despite risks, sustained commitment to economic reform is crucial for continued recovery and debt sustainability. The economy emerged from six consecutive quarters of contraction in the second half of 2023, with signs of improvement in the persistent twin deficits of the government budget and external current account, which were at the heart of the economic crisis.
