Sri Lanka’s industrial sector rebounds amid improvements.

Sri Lanka’s industrial sector is showing signs of recovery, after being significantly impacted by the 2022 economic crisis. The Index of Industrial Production (IIP) for January 2025 recorded 95.2 points, reflecting a 6.1% year-on-year growth. This marks a notable resurgence in industrial activities, which had previously been hampered by a foreign currency shortage, stringent import controls, and the overall economic downturn caused by rising borrowing and tax rates.

The revival of industrial production is attributed to improved foreign currency availability, the lifting of import restrictions, and increasing business and consumer spending, driven by a decline in borrowing costs and inflation. Key sectors contributing to growth include non-metallic mineral products, petroleum, and chemicals, which saw substantial increases in production. Despite this, traditional industries like food manufacturing and apparel manufacturing showed only modest growth, while beverage production saw a significant decline.

While the recovery is promising, Sri Lanka’s industrial base remains relatively shallow, making the country vulnerable to global shocks and disruptions. To ensure sustainable growth and resilience, there is a need to diversify and deepen its manufacturing sector, integrating into global and regional supply chains to foster economic stability and create higher-paying jobs.

Source: Daily Mirror