Sri Lanka: State of the Economy 2021



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Pandemics and Policy: Protecting Health and Promoting Economic Recovery

The COVID-19 pandemic served to highlight structural challenges predating the pandemic. Fiscal weaknesses were the most critical, but not the only one. Sri Lanka entered the crisis with an uninspiring export performance, high and rising informality in the labour market, inadequate social protection, inequities in access to education and health services and rising food insecurity, amongst others. The pandemic in turn has profoundly altered perceptions about the appropriate settings for economic policy to better prepare for the future.

Sri Lanka will face tough trade-offs between managing its fiscal imbalances and maintaining supportive policies to emerge from the crisis better off than before. On the plus side, as vaccine rollouts accelerate, investor confidence will pick up. If at the same time, policy goals are translated into concrete projects and programmes with visible benefits for all Sri Lankans, the end of the COVID-19 crisis could mark the beginning of a resurgent phase of economic development.

This report, focused on the theme of ‘Pandemics and Policy: Protecting Health and Promoting Economic Recovery’ examines some of the critical socio-economic issues and policy choices facing Sri Lanka today.

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