quality:correction, structural:scholar_edition
Economy

According to the International Monetary Fund, Sri Lanka's GDP in terms of purchasing power parity is the second highest in the South Asian region in terms of per capita income. In the 19th and 20th centuries, Sri Lanka became a plantation economy famous for its production and export of cinnamon, rubber, and Ceylon tea, which remains a trademark national export. The development of modern ports under British rule raised the strategic importance of the island as a centre of trade. From 1948 to 1977, socialism strongly influenced the government's economic policies. Colonial plantations were dismantled, industries were nationalised, and a welfare state established. In 1977, the free market economy was introduced to the country, incorporating privatisation, deregulation, and the promotion of private enterprise.

While the production and export of tea, rubber, coffee, sugar, and other commodities remain important, industrialisation has increased the importance of food processing, textiles, telecommunications, and finance. The country's main economic sectors are tourism, tea export, clothing, rice production, and other agricultural products. In addition to these economic sectors, overseas employment, especially in the Middle East, contributes substantially in foreign exchange.

As of 2020, the service sector makes up 59.7% of GDP, the industrial sector 26.2%, and the agriculture sector 8.4%. The private sector accounts for 85% of the economy. China, India and the United States are Sri Lanka's largest trading partners. Economic disparities exist between the provinces with the Western Province contributing 45.1% of the GDP and the Southern Province and the Central Province contributing 10.7% and 10%, respectively. With the end of the war, the Northern Province reported a record 22.9% GDP growth in 2010.

The per capita income of Sri Lanka doubled from 2005 to 2011. During the same period, poverty dropped from 15.2% to 7.6%, unemployment rate dropped from 7.2% to 4.9%, market capitalisation of the Colombo Stock Exchange quadrupled, and the budget deficit doubled. 99% of the households in Sri Lanka are electrified; 93.2% of the population have access to safe drinking water; and 53.1% have access to pipe-borne water. Income inequality has also dropped in recent years, indicated by a Gini coefficient of 0.36 in 2010.

The 2011 Global Competitiveness Report, published by the World Economic Forum, described Sri Lanka's economy as transitioning from the factor-driven stage to the efficiency-driven stage and that it ranked 52nd in global competitiveness. Also, out of the 142 countries surveyed, Sri Lanka ranked 45th in health and primary education, 32nd in business sophistication, 42nd in innovation, and 41st in goods market efficiency. In 2016, Sri Lanka ranked 5th in the World Giving Index, registering high levels of contentment and charitable behaviour in its society. In 2010, The New York Times placed Sri Lanka at the top of its list of 31 places to visit. S&P Dow Jones Indices classifies Sri Lanka as a frontier market as of 2018. Sri Lanka ranks well above other South Asian countries in the Human Development Index (HDI) with an index of 0.750.

By 2016, the country's debt soared as it was developing its infrastructure to the point of near bankruptcy which required a bailout from the International Monetary Fund (IMF). The IMF had agreed to provide a US$1.5 billion bailout loan in April 2016 after Sri Lanka provided a set of criteria intended to improve its economy. By the fourth quarter of 2016, the debt was estimated to be $64.9 billion. Additional debt had been incurred in the past by state-owned organisations and this was said to be at least $9.5 billion. Since early 2015, domestic debt increased by 12% and external debt by 25%. In November 2016, the IMF reported that the initial disbursement was larger than US$150 million originally planned, a full US$162.6 million (SDR 119.894 million). The agency's evaluation for the first tranche was cautiously optimistic about the future. Under the program, the Sri Lankan government implemented a new Inland Revenue Act and an automatic fuel pricing formula which was noted by the IMF in its fourth review. In 2018 China agreed to bail out Sri Lanka with a loan of $1.25 billion to deal with foreign debt repayment spikes in 2019 to 2021.

In September 2021, Sri Lanka declared a major economic crisis. The Chief of its Central Bank has stepped down amid the crisis. The Parliament has declared emergency regulations due to the crisis, seeking to ban "food hoarding".

Tourism, which provided the economy with an input of foreign currency, has significantly declined as a result of the ongoing COVID-19 pandemic.