Sri Lanka

Sri Lanka became a full member of SASEC in May 2014, together with Maldives, following several years as an active observer. Bangladesh, Bhutan, India, and Nepal formed the project-based partnership in 2001.

Sri Lanka is working toward achieving a people-oriented and open socio-economic system that is focused on providing a decent quality of life for all. The report Sustainable Sri Lanka 2030 Vision and Strategic Path outlines Sri Lanka's aim to become a sustainable, upper middle income, Indian Ocean hub, with a prosperous, competitive, and advanced economy, an environment that is green and flourishing, and a society that is inclusive, harmonious, peaceful and just, through a balanced inclusive green growth (BIGG) approach. The report also highlights the country's aim to maximize its geostrategic potential to serve as an emerging transshipment and logistics hub as well as a commercial hub connecting different regions.

SASEC Projects in Sri Lanka

Since 2002, Sri Lanka has actively participated—as an observer, and then as a full member—in SASEC regional cooperation forums, knowledge-sharing activities, and capacity building. An ADB-supported project (worth $702.93 million) will help construct an elevated port access highway with related facilities, in line with SASEC operational priorities for transport. Five technical assistance projects (worth $5.73 million) support Sri Lanka’s energy and transport sectors.

Trade Snapshot

Direction of Intra-regional Trade

The value of Sri Lanka's merchandise exports and imports trade with other SASEC member countries, using International Monetary Fund data from 2022, is captured in the tables below.

India is Sri Lanka's number 2 import source worldwide, with imported goods valued at over $3 billion.

India ranks 3rd as Sri Lanka's top export destination, with exported goods from Sri Lanka to India valued at $654 million.

Sri Lanka Trade - Import

Source: IMF Direction of Trade Statistics, accessed May 2022

Sri Lanka Trade - Export

Source: IMF Direction of Trade Statistics, accessed May 2022

Logistics Performance Index (LPI)

After garnering 2.7 in 2014, Sri Lanka posted an overall LPI score of 2.6 in 2018, ahead of the 2018 South Asia regional average score of 2.51. This brings the country at rank 94 out of 168 economies for 2018, compared to 89 for 2014. Sri Lanka's best scores come from tracking and tracing (2.79), timeliness (2.79), and customs (2.58).

Sri Lanka LPI 2018

Source: World Bank LPI (accessed December 2018)

Note: The LPI overall score reflects perceptions of a country's logistics based on six core dimensions: (i) efficiency of customs clearance process, (ii) quality of trade- and transport-related infrastructure, (iii) ease of arranging competitively priced shipments, (iv) quality of logistics services, (v) ability to track and trace consignments, and (vi) frequency with which shipments reach the consignee within the scheduled time. The scores for the six areas are averaged across all respondents and aggregated to a single score using principal components analysis. A higher score indicates better performance.

Economic Outlook

Asian Development Outlook

Sri Lanka growth is forecast to slow to 2.4% in fiscal year (FY) 2022, constrained by low foreign exchange reserves and double-digit inflation. GDP is projected to pick up to 2.5% in FY2023, assuming the population overcomes its hesitancy in getting COVID-19 booster doses. Recovery of the tourism sector and the global economy is expected to support activity in FY2022 and FY2023. The country faces a major policy challenge as it prepares for its aging population.

Source: Asian Development Outlook 2022 (ADB)
South Asia Economic Focus

Real GDP in Sri Lanka is projected at -9.2% in FY2022 and -4.2% in FY2023 due to a severe balance of payment crisis and risks posed by the country's political situation. The country also faces pressures from declines in remittances and tourism income. The country's exports experienced some recovery in 2022 though still behind the rest of South Asia. Sri Lanka's public debt should be managed cautiously given uncertainties in the country's financial sector.

Source: South Asia Economic Focus, Fall 2022 (WB)