• World Bank projects further reduction with ongoing macroeconomic stability
• Despite progress, poverty remains significantly higher than pre-crisis levels

Sri Lanka’s poverty rate is expected to decline to 22.7% and remain around 20% in the medium term with continued macroeconomic stabilisation, the World Bank said.

The World Bank, in its Sri Lanka Development Update, said that following continued macroeconomic stabilisation, poverty is expected to decline to 22.7% in 2025 and remain around 20% in the medium term.

“Under current projections, the economic crisis is expected to have reversed a decade of poverty reduction in Sri Lanka,” World Bank said.

It said that the poverty rate was 24.5% (at $ 3.65 per person per day, PPP) in 2024 and although poverty declined marginally during the year, it remains nearly double what it was in 2019 (11.3%).

The poverty rate increased to 27.1% at the height of the economic crisis in 2023.

Moreover, the World Bank said that household incomes are well below pre-crisis levels, resulting in elevated poverty and food insecurity. Vulnerability has also increased, with a third of Sri Lankans living in poverty or one shock away from falling back into it.

However, it said that the increase in public sector wages will support households and help revive consumption. However, potential trade-related job losses could severely impact households.

“A more pro-poor economic recovery, in which economic growth translates into higher rates of growth in household income among less well-off households, could help bring poverty rates back to their pre-crisis levels before 2030,” it said.

The World Bank added that expanding employment opportunities in industry and services for poorer and vulnerable segments of the population increased labour incomes, restoring growth in micro and small enterprises, and agricultural incomes will help to bring poverty rates up.