Sri Lanka’s economy has reached a significant milestone. Real GDP has returned to pre-crisis levels, and the World Bank Group's latest Sri Lanka Development Update confirms what the national accounts have been hinting at for some time. Twelve consecutive quarters of expansion, a 4.7% rise in output in the first half of this year, and a primary budget surplus that has grown sharply are achievements that deserve to be acknowledged. Those who lived through the empty fuel queues, the shuttered shops and the long evenings of power cuts will not dismiss them lightly.
Yet the same report carries a sober qualification that ought to temper any celebration. The recovery remains incomplete and uneven, with household incomes and labour market outcomes still lagging the broader economic rebound. In plain language, the economy has recovered faster than the people who live in it. A growth figure can return to its 2018 level while the family budget, the monthly wage and the prospects of young job seekers remain stubbornly short of where they once stood.
The poverty figure tells the story most starkly. At 16.9%, it remains well above pre-crisis levels. Behind that percentage are households that sold jewellery, cut meals, pulled children out of tuition classes and quietly accumulated debt during the worst months of the crisis. Many have not rebuilt what they lost. Inflation, which had been tamed, has begun to pick up again on the back of higher energy and food prices, and it is the poorest who feel such increases first and hardest. A recovery that statisticians can see but a housewife in the market cannot feel is a recovery that has yet to convince.
Also, the World Bank projects growth of 4.4% this year, ahead of earlier expectations, driven by industry and steady services. But the same projections show growth easing to 4.2% in 2027 as the post-crisis rebound fades and productivity stays weak. The easy gains of bouncing back from the bottom are nearly spent. What follows will be harder.
This is the heart of the matter. Recovery meant restoring what was lost. Transformation means building what has never quite existed: an economy powered by private investment, exports and rising productivity rather than by government spending. That shift will not happen by itself. It requires predictable policy, a stable environment for investors, better infrastructure and a willingness to let the private sector take a larger role in key areas of the economy.
The report's special focus on agribusiness deserves serious attention from policymakers. Primary agriculture accounts for only about 8% of GDP, but the wider agrifood system, spanning processing, logistics, trade and food services, contributes roughly one-sixth of output and over 40% of employment. It supplies nearly 30% of goods exports. Our tea, coconut, cinnamon, seafood and rubber already compete in demanding global markets. Few sectors offer such a combination of foreign exchange, rural jobs and poverty reduction, and few have been so consistently neglected in the policy conversation.
The recommendations are not exotic. A more predictable, export-oriented trade policy. Public money shifted away from inefficient subsidies and towards agricultural research and climate-smart technologies. Better quality infrastructure, digital traceability and cold-chain logistics so that produce reaches buyers fresh and fetches a fair price. Reforms to land tenure and access to finance so that the smallholder, who is the backbone of the sector, can invest with confidence. None of this is beyond the capacity of a government that has already shown it can take difficult decisions.
The risks, however, are real. The World Bank warns of prolonged volatility in global energy markets and the possible impact of El Niño on productivity and food security. A country that has just climbed out of one crisis cannot afford to be careless about the next. Resilience must be built into the plan, not left to chance and good weather.
The broader regional picture offers some encouragement. South Asia is expected to grow by 6.9% this year, and the World Bank's companion report points to artificial intelligence as a possible new source of growth through higher productivity, wider export opportunities and better public services. Sri Lanka, with its literate population and ambitious young workforce, should not watch from the sidelines.
The country has reached a milestone, and the government and the people have earned a moment of satisfaction. But the measure of success will not be a line on a chart that has returned to 2018. It will be a worker whose wages stretch further, a farmer whose harvest finds a better market, and a young graduate who does not need to look abroad for a future. Until then, the work continues.