In Focus – What has driven Sri Lanka’s post-crisis growth?

After two years of Sri Lanka’s economy contracting following the economic crisis, the economy began to recover at a 5% growth rate in 2024 and that very much continued in 2025. Prior to the crisis, economic growth was closely tied to fiscal expansion, but this isn’t so much the case this time around. The bigger question that comes from this is what is causing growth now and can it continue this year too?

In order to tackle this the research team looked at multiple data points to look at what the key drivers of growth outside the more obvious ones.

One such example is that while it looks like government capital expenditure is declining in 2024, investments have increased significantly even more than pre-crisis levels. Understanding this new linkages within the Sri Lankan economy on various aspects could serve as a key to understanding Sri Lanka’s growth story in a context of fiscal surpluses.

For those interested in the details, the In Focus on Frontier Athena provides a detailed but succinct analysis of what has driven this growth alongside investments and how we see some of these drivers moving in 2025 in SL’s growth story. If you are a client who has not had a chance to read through it, please click here. Otherwise get in touch with us to subscribe to our reports (clientconnect@frontiergroup.info).