Sri Lankan Economy: A Tale of Misidentification of Priorities, COVID-19 Shock, and Recovery

Vidanagama, S.


With the onset of the pandemic, certain areas of the economy had to be closed down. The immediate reaction of many analysts was to place the blame of the resultant slowdown of economic activities on the pandemic. However, a close examination of the Sri Lankan economy over the past decades shows that the economy was in no place to face an exogenous shock such as a pandemic. Thereby, such a slowdown was inevitable. However, the pandemic only aggravated the problems caused by three longstanding gaps in the economy. These gaps were mainly caused by poor growth performance and misidentifications of priorities by policy makers since independence in 1948. Considering the seriousness of the pandemic, the immediate way-out strategy in the short and medium term appears to be implementing measures to achieve the long-term growth that the country anticipated before the pandemic destabilized the economy. Once that is achieved, long term policies could be put in place to reach the status of a ‘developed country’.

Keywords: COVID-19 shock, Sri Lankan economy, missed opportunities, GDP growth, Sri Lanka