The COVID-19 crisis induced widespread losses in livelihoods, leading to a significant increase in poverty. In Sri Lanka states World Bank Development Update: Economic and Poverty Impact of Covid 19

In its concluding remarks the World Bank development update states thus

“The sharp economic slowdown is estimated to have increased the $3.20 poverty rate from 9.2 percent in 2019 to 11.7 percent in 2020, leading to more than 500,000 additional poor people.

The economic impact of the pandemic is expected to be felt broadly. The impact was disproportionately large among those working in more urbanized areas such as the Western province, likely due to the large impact on industry, and places that had high numbers of poor before the pandemic, such as the Northern, Eastern, Uva and Sabaragamuwa Provinces. Mitigation measures implemented by the government since the onset of the pandemic helped absorb the labor market impact and soften the impact on poverty. A large budget (given limited fiscal space) was expended on these mitigation efforts which, if they were more targeted, could have had an even greater mitigating impact on poverty.

Limited fiscal space, however, is a severe constraint to scaling up the public response.

As Sri Lanka’s economy gradually recovers from the crisis, efforts to restore livelihoods and to make them more resilient could help Sri Lanka to continue its path of poverty reduction and shared prosperity. Sri Lanka’s economy is expected to gradually recover, with a projected GDP”.


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