Sri Lanka’s economy is transitioning from a predominantly rural-based economy towards a more urbanized economy oriented around manufacturing and services. The country has made significant progress in its socio-economic and human development indicators and ranks among the highest in South Asia. Foreign direct investment (FDI) into Sri Lanka reached an all-time high of $1.6 billion in 2018. Recent FDI was concentrated in real estate, mixed development projects, ports, and telecommunications sectors. The tourism sector, with around two million tourists per year (before the global COVID-19 pandemic) and a variety of cultural, wildlife, and outdoor offerings, has been a priority sector for investors.
Lucrative Political Outlook
President Gotabaya Rajapaksa, who came to power in December 2019, ran on promoting a pro-business agenda, including announcing tax benefits for new investments to attract Foreign Direct Investment (FDI).
Growth Oriented Policies
Sri Lanka is poised to be an export-oriented economic hub at the centre of the Indian Ocean (with government control of strategic assets such as Sri Lankan Airlines) with improving trade logistics, attracting export-oriented FDI, and boosting firms’ abilities to compete in global markets.
Booming Tourism Sector
Sri Lanka has observed very high double-digit growth since 2010. In 2018, Sri Lanka saw a record 2.3 million tourist arrivals, up 10.3% from a year earlier, according to the CBSL. The government has organized massive promotional campaigns in major markets, such as India, China, Europe and Australia. Sri Lanka was named by Lonely Planet as the top travel destination in 2019.
The economy has been on a growth trajectory since 2001 with steady growth rates. The GDP expansion rates have been over 3% pre-pandemic years with higher levels of urbanisation and service industry expansion.
Real Estate Hotspot
As an emerging market with high growth trajectory and infrastructure spending by the government, Sri Lanka is coming up as a capital appreciation story. Prices have boomed by over 17% nationally year ending 2018. While Colombo has seen the highest growth, suburban areas are also on the same track owing to high demand and low construction activity.
Did you know?
A pro-business government has enacted various policies and infrastructure projects to increase Foreign Direct Investment into the country, with a vision to make Sri Lanka a regional hub.
A booming tourism sector with double digit growth per annum over the last decade has been a driving factor for growth in many industries
An extraordinary boom in Sri Lankan real estate market with double digit price surge (pre-pandemic) amid rising demand and weak construction activity- a positive looking sector for the foreseeable future.