Publication: Sri Lanka Country Climate and Development Report
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2025-11-18
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2025-11-18
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Sri Lanka is emerging from the recent economic crisis with a renewed focus on sustainable growth and resilience. Following a series of policy reforms and successful debt restructuring, the economy has stabilized, though poverty rates remain high. As the country charts its growth path, prioritizing investments in resilient, inclusive development is both an urgent necessity and a strategic opportunity to boost economic activity, create jobs, and improve overall welfare, while safeguarding against the growing impacts of climate change. Climate change poses significant challenges for Sri Lanka, with potential economic losses ranging from 3.3 to 3.5 percent of the country's gross domestic product (GDP) by mid-century, due to reduced labor productivity resulting from heat stress, decreased agricultural yields, and intensified flooding in both urban and rural areas. These adverse effects disproportionately affect the poorest and most vulnerable populations, particularly those in agriculture and coastal areas, potentially increasing poverty rates by 1.7 to 1.8 percentage points. Strategic investments in resilience can substantially mitigate these risks while unlocking economic opportunities and creating jobs. Several no-regrets measures are already outlined in Sri Lanka’s Nationally Determined Contributions, National Adaptation Plan, and Climate Prosperity Plan. These include expanding clean energy sources, modernizing transportation systems, improving energy efficiency, enhancing irrigation, and upgrading water and sanitation services. These investments offer a host of other benefits, including lower energy costs, improved air quality, enhanced urban livability, and increased agricultural productivity.
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“World Bank. 2025. Sri Lanka Country Climate and Development Report. © World Bank. http://hdl.handle.net/10986/43995 License: CC BY-NC 3.0 IGO.”
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