Editing Economy of Sri Lanka (section)

===Post 1977 period===

In 1977, Colombo abandoned statist economic policies and its import substitution industrialisation policy for market-oriented policies and export-oriented trade. Sri Lanka would after that be known to handle dynamic industries such as food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In the 1970s, the share of the middle class increased.<ref name=":1">{{Cite web |agency=Associated Press |date=2022-06-22 |title=Sri Lanka's prime minister says economy has 'completely collapsed' |url=https://www.theguardian.com/world/2022/jun/23/sri-lanka-prime-minister-economy-completely-collapsed |access-date=2022-06-29 |website=The Guardian |language=en}}</ref>

Between 1977 and 1994 the country came under [[United National Party|UNP]] rule in which under President [[Junius R. Jayewardene|J.R Jayawardana]] Sri Lanka began to shift away from a [[socialist]] orientation in 1977. Since then, the government has been deregulating, privatizing, and opening the economy to international competition. In 2001, Sri Lanka faced bankruptcy, with debt reaching 101% of GDP. The impending [[currency crisis]] was averted after the country reached a hasty ceasefire agreement with the LTTE and brokered substantial foreign loans. After 2004 the [[UPFA]] government has concentrated on the mass production of goods for domestic consumption such as rice, grain and other agricultural products.<ref>{{cite web|url=http://www.adb.org/sites/default/files/ADO/2008/SRI.pdf|title=Asian Development Outlook 2008|publisher=Asian Development Bank}} {{dead link|date=April 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>
however twenty-five years of [[Sri Lankan civil war|civil war]] slowed economic growth,{{citation needed|date=December 2015}} diversification and liberalisation, and the political group [[Janatha Vimukthi Peramuna]] (JVP) uprisings, especially the second in the early 1980s, also caused extensive upheavals.<ref>{{cite web|url=http://www.postcolonialweb.org/southasia/srilanka/economics/economics1.html|title=The Economy of Sri Lanka|publisher=The Postcolonial Web-National University of Singapore}}</ref>

Following the quelling of the JVP insurrection, increased [[privatization]], economic reform and the stress on export-oriented growth helped improve economic performance, increasing GDP growth to 7% in 1993. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an annual average rate of 5.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996.

The economy rebounded in 1997–98 with a growth of 6.4% and 4.7% – but slowed to 3.7% in 1999. For the next round of reforms, the central bank of Sri Lanka recommends that Colombo expand market mechanisms in nonplantation agriculture, dismantle the [[government]]'s monopoly on wheat imports, and promote more competition in the financial sector. Economic growth has been uneven in the ensuing years as the economy faced a multitude of global and domestic economic and political challenges. Overall, average annual GDP growth was 5.2% over 1991–2000.

In 2001, however, GDP growth was negative 1.4% – the first contraction since independence. The economy was hit by a series of global and domestic economic problems and was affected by terrorist attacks in Sri Lanka and the [[United States]]. The crises also exposed the fundamental policy failures and structural imbalances in the economy and the need for reforms. The year ended in parliamentary elections in December, which saw the election of [[United National Party]] to Parliament, while [[Sri Lanka Freedom Party]] retained the presidency.

During the short-lived peace process from 2002 to 2004, the economy benefited from lower [[interest rate]]s, a recovery in domestic demand, increased [[tourism|tourist arrivals]], a revival of the stock exchange, and increased foreign direct investment (FDI). In 2002, the economy experienced a gradual recovery. During this period Sri Lanka has been able to reduce defense expenditures and begin to focus on getting its large, public sector debt under control. In 2002, economic growth reached 4%, aided by strong [[service sector]] growth. The [[agricultural sector]] of the economy staged a partial recovery. Total FDI inflows during 2002 were about $246 million.<ref>{{Cite web|url=http://www.factrover.com/economy/Sri_Lanka_economy.html|title=Sri Lanka Economy – GDP, Budget, Industry and Agriculture|publisher=factrover|access-date=22 April 2016|archive-date=4 May 2019|archive-url=https://web.archive.org/web/20190504180340/http://www.factrover.com/economy/Sri_Lanka_economy.html|url-status=dead}}</ref>

The [[Mahinda Rajapaksa|Mahinda Rajapakse]] government halted the privatization process and launched several new companies as well as re-nationalising previous state-owned enterprises, one of which the courts declared that privatization is null and void.<ref>{{Cite news |url= http://www.sundaytimes.lk/090607/FinancialTimes/ft316.html|title=SLI privatization null and void, reverts back to the state }}</ref> Some state-owned corporations became overstaffed and less efficient, making huge losses with series of frauds being uncovered in them and nepotism rising.<ref>{{cite web|url= http://www.economynext.com/Sri_Lanka_aiming_to_reduce_burden_of_SOEs_on_the_people-3-3315-1.html|title= Sri Lanka aiming to reduce burden of SOEs on the_people|access-date= 17 November 2015|archive-url= https://web.archive.org/web/20151118070627/http://www.economynext.com/Sri_Lanka_aiming_to_reduce_burden_of_SOEs_on_the_people-3-3315-1.html|archive-date= 18 November 2015|url-status= dead}}</ref> During this time, the [[European Union|EU]] revoked [[Generalized System of Preferences|GSP]] plus preferential tariffs from Sri Lanka due to alleged human rights violations, which cost about US$500 million a year.<ref>{{Cite news|title = Sri Lanka Loses E.U. Trade Benefit|url = https://www.nytimes.com/2010/07/07/business/global/07trade.html|newspaper = The New York Times|date = 6 July 2010|access-date = 17 November 2015|issn = 0362-4331|first = Vikas|last = Bajaj}}</ref><ref>{{Cite news |title = GSP Plus suspension will cost Lanka Rs. 570 billion a year|url = http://www.sundaytimes.lk/100704/News/nws_02.html|newspaper = Sunday Times |access-date = 17 November 2015}}</ref>

The resumption of the civil war in 2005 led to a steep increase in defence expenditures. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country.<ref>{{Cite news|last=Fernandez|first=Minelle|date=28 July 2007|title=Lawlessness Grows in Strife-Torn Sri Lanka|url=https://www.washingtonpost.com/wp-dyn/content/article/2007/07/27/AR2007072702462.html|access-date=26 April 2021|newspaper=[[The Washington Post]]}}</ref><ref>{{Cite web|last=Hogg|first=Charu Lata|title=Sri Lanka's leader takes a step backward on human rights|url=http://hrw.org/english/docs/2007/08/15/slanka16690_txt.htm|url-status=dead|archive-url=https://web.archive.org/web/20070929144522/http://hrw.org/english/docs/2007/08/15/slanka16690_txt.htm|archive-date=29 September 2007|access-date=26 April 2021|website=[[Human Rights Watch]]}}</ref>

A sharp rise in world petroleum prices combined with the economic fallout from the civil war led to inflation that peaked at 20%.{{Citation needed|date=April 2021}}