Stability and risk-aversion mark Sri Lanka's outlook

Subject

Political and economic outlook.

Significance

The national unity government of President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe completed its first year in July. After a phase of poor cohesion and unpopular decisions, the government is regaining public support. Sirisena, leader of the Sri Lanka Freedom Party (SLFP), and Wickremesinghe, leader of the United National Party (UNP), have extended their alliance to 2020, boosting political stability. Yet significant economic and political challenges remain.

Impacts

• Dependence on Chinese investment is unavoidable, but Colombo will seek new partners.
• Rajapaksa will remain the most important political challenge for the government.
• Ethnic reconciliation is a distant dream, but overt tensions are subsiding.