Sri Lanka Economic Structure

By: EconomyWatch   Date: 12 April 2010

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Sri Lanka has emerged as a strong developing economy in South Asia in the first decade of the 21st century. Sri Lankan stock market was among the world’s best performing markets with 100% gain in 2009. By November 2009, its official foreign exchange reserves rose to over $5 billion. A number of reconstruction and development projects are in pipeline in the northern and eastern provinces. However, high budget deficits and debt interest payments pose major challenges in the growth of the economy.

Sri Lanka Economic Structure: Division by Sector

The economic structure of Sri Lanka can be divided into the following sectors:

Primary Sector: Sri Lankan primary agriculture sector can be divided into three major categories .i.e. farming, fishing and aquaculture. As of 2008, 32.7% of the labor force was employed in the sector. Some major crops are rice and the staple cereal. Coconut, tea and rubber plantation is done extensively. Tea is one of the country’s biggest foreign exchange earners. To promote Sri Lankan Ayurveda, ganja or cannabis is also grown. The fishing sector of Sri Lanka is still recovering from the throes of 2004 tsunami that damaged 90% of the country’s fishing boats.

Secondary Sector: The industrial sector provides employment to 26.3% of the workforce (as of 2008). Around 18% of the GDP comes from manufacturing which is also the country’s largest industrial subsector. The construction sector contributes 7% to the GDP followed by mining and quarrying that account for 1.5%. Measured by value addition food, beverage, and tobacco contribute 44% followed by textiles, garment, and leather that contribute 20%. Some other major manufacturing industries include petroleum, chemical, plastic rubber and non-metallic mineral-based products products.

Tertiary Sector: Sri Lankan services sector is the major employer as 41% of the country’s labor force is engaged in it (as of 2008). The growth rate in 2006-07 was 7% and dropped to 5.6% in 2008 due to recession. The major contributory sectors to growth were the financial services, telecom, trading and transport. The information technology sector is growing steadily in Sri Lanka. Tourism, which has been one of the major foreign exchange earners for decades, is also taking off post civil war. The target of the country’s tourism development board is to attract 2.5 million tourists and earn $2 billion by 2016.


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