Sri Lanka economy shows growth despite persistent household poverty

Sri Lanka is experiencing a macroeconomic recovery characterized by returning growth, strengthened foreign reserves, and progress through the International Monetary Fund (IMF) programme. However, this statistical recovery is increasingly decoupled from the lived reality of many citizens. While GDP and government revenue have improved, poverty levels remain significantly higher than they were before the 2022 economic crisis.

Household consumption has reached a record real value of approximately Rs. 9 trillion, but consumer behavior has shifted toward extreme caution. A report by Boston Consulting Group and the Ceylon Chamber of Commerce indicates that while 77% of consumers expect spending to increase, only 38% expect their income to rise. This gap has led households to prioritize essential goods while reducing discretionary spending.

Economic disparities persist across different demographics. The middle class drives roughly 70% of national consumption, with rural areas containing 56% of middle-class households. Meanwhile, affluent households represent only 4% of the population but account for 11% of total consumption. Despite the stabilization of inflation and the revival of tourism, many households continue to struggle with the high costs of electricity, medicine, and basic goods following the massive loss of purchasing power during the crisis.