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.

To achieve the goal of improving and enhancing the living standards of the people, the Government is introducing key economic policies that will enhance competitiveness of the Sri Lankan market, and establish mega zones to boost technology and industrial development.

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. Four technical assistance projects (worth $3.48 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 2020, is captured in the tables below.

India is Sri Lanka's number 2 import source worldwide, with imported goods valued at over $3.9 billion.

India ranks 2nd as Sri Lanka's top export destination, with exported goods from Sri Lanka valued at $671 million.

Sri Lanka Trade in SASEC Subregion Source: IMF Direction of Trade Statistics, as of October 2020

Sri Lanka Trade - Import

Source: IMF Direction of Trade Statistics, as of October 2020

Sri Lanka Trade - Export

Source: IMF Direction of Trade Statistics, as of October 2020

Ease of Doing Business

In 2020, Sri Lanka moved to 99 rank in the Doing Business report. It ranked ranked 96 in trading across borders. The previous year, Sri Lanka (i) launched a single window for construction permits, (ii) introduced an online system for filing corporate income tax, value added tax, and employee trust fund contributions, and (iii) implemented a single window that simplifies registration of property.

Source: Doing Business, accessed June 2020

Note: The World Bank/International Finance Corporation's annual flagship Doing Business Report measures the ease of doing business by ranking economies from 1 to 190, based on quantitative indicator sets that can be compared across economies and over time, with first place being the best and indicating a regulatory environment is conducive to business operation. Of immediate relevance to SASEC aims and goals are indicator sets on Starting a Business, and Trading across Borders.

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

The coronavirus health emergency that lowered global growth will also curtail growth in Sri Lanka. Government policy actions should sustain households, businesses, and the overall economy, with gross domestic product projected at 2.2% in fiscal year (FY) 2020. Inflation is projected to reach an average 5.0% in FY2020. Greater participation in global value chains could lift Sri Lanka's manufacturing sector.

Source: Asian Development Outlook 2020 (ADB)
South Asia Regional Update

Economic growth in Sri Lanka has been supported by growth in the tourism sector. Real GDP growth reached 3.8% year-on-year in the first quarter of 2019 supported by a rebound in manufacturing, mining, and construction. Real GDP growth was projected to reach 3.6% in 2019 and 4.0% in 2020 as the tourism sector stabilizes. By the end of 2018, headline inflation dropped to 2.8%. Promoting inclusive growth will need structural reforms that address climate change, implement gender budgeting, and adopt targeted social protection programs.

Source: South Asia Regional Update, August 2019 (IMF)