Villagers and cart in rural Sri Lanka, circa 1910
Courtesy Library of Congress

Sri Lanka's economic prospects in early 1988 were linked at least in part to the political and security situation. If political violence could be brought under control, the government had commitments from foreign investors and donors to finance a reconstruction program that would ensure economic growth in the short term. If the violence were to continue, the diversion of resources into defense and the negative impact on tourism and foreign investment appeared likely to result in economic stagnation.

Data as of October 1988