Asia Economy

The British brought tea to Sri Lanka in the mid-1800s and, quickly overtaking coffee, it has grown into one of the island nation’s most notable exports. Sri Lanka’s single-origin tea, Ceylon Tea, is highly sought after in international markets and well known companies like Dilmah sell it at a premium all over the world. However, while tea as a...

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Sri Lanka has had a poor history of revenue collection. Tax revenues as a percentage of GDP have declined from above 20% in the early 1990s to about 12.2% in 2014. In comparison, Malaysia and Thailand are at about 15%, while Singapore is about 13%. India, however, is at 10%, although it also contains a far larger informal economy.

Worker remittances have been growing over time and now play an important role in the country’s international capital flows. They surpassed $7bn in 2014, up from about $2bn in 2006. Despite levelling off in early 2015, they then reached $8.2bn in 2015, which remains a large portfolio for a $75bn economy.

Sri Lanka prospered under its former president, Mahinda Rajapaska, a figure who is credited by many with ending the civil war and practising a highly directed, centralised style of management. During his tenure GDP growth remained high, rising over time and, despite some volatility, stayed positive throughout his administration. Now, the...