Growing at an annual average rate of 6 percent since 2005, Sri Lanka has emerged as one of the most dynamic economies in South Asia. In 2010, the International Monetary Fund upgraded Sri Lanka to middle-income emerging market status. Performing much better than comparable economies, the Asian Development Bank predicts the country’s gross domestic product will grow by a robust 7 percent this year.
This comes despite 26 years of conflict between the government and the Tamil Tigers, which devastated the nation. With support from multilateral organizations and donors such as China, India, Australia and Japan, Sri Lanka emerged as one of the most successful post-conflict economies. The country’s solid economic performance has translated into impressive improvements in human development and poverty reduction. The country, ranked 97th overall, leads South Asia on the 2011 Human Development Index. Sri Lanka’s life expectancy (75 years of age), infant mortality (9.47 per 1,000 live births), and literacy (90.6 percent) levels are comparable to those of developed countries. The national poverty rate has plummeted 17.2 percentage points since 1991 to 8.7 percent.
Yet despite these notable achievements in socio-economic development, Sri Lanka remains stunningly unequal. According to the Gini Index of wealth distribution, Sri Lanka is the 27th most unequal country in the world. While quality of life has markedly improved in urbanized areas, particularly in the Western Province, poverty remains entrenched in the conflict-affected north and east. In recognition of the uneven growth and development, President Mahinda Rajapaksa set as his administration’s goal sustainable, inclusive growth for Sri Lanka.
Consistent with that goal, in its 2011-2015 country strategy for Sri Lanka, the Australian Agency for International Development aims to support inclusive growth. Citing low social and economic indicators in lagging provinces, AusAID focuses on health, education and sustainable economic development to catalyze broad-based growth. To ensure sustainability and greater impact of its assistance, AusAID works with trusted development partners, such as the United Nations and the World Bank.