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The Asian Development Bank's (ADB) recent Asian Development Outlook (ADO) for April 2024 projects a moderate economic recovery for Sri Lanka, with growth rates estimated at 1.9% for 2024 and 2.5% for 2025 after two consecutive years of contraction. Encouraging signs of recovery have emerged, including a deceleration of inflation, increased foreign exchange reserves, and an appreciated exchange rate. Key contributors to this recovery include improved supply conditions, rising tourist arrivals, and remittance inflows. The ADB emphasizes the importance of sustained reforms and enhanced consumer and business confidence for achieving these growth forecasts. Timely completion of external debt restructuring is also highlighted as crucial for Sri Lanka's debt sustainability efforts.
Despite these positive indicators, Sri Lanka faces significant challenges in addressing poverty vulnerabilities exacerbated by the COVID-19 pandemic and the economic downturn. The erosion of poverty gains underscores the need for targeted support for the most affected and vulnerable segments of society. The ADB stresses the importance of implementing inclusive social protection systems and structural reforms to alleviate poverty, reduce income inequality, and create sustainable livelihoods. By prioritizing job creation and fostering inclusive growth, Sri Lanka can lay the foundation for long-term economic resilience and prosperity while ensuring that the benefits of recovery reach all segments of society.
