Major political instability and distressed government finances have blighted Sri Lanka, which is ‘mostly unfree’ for economic freedom. Although the state is trying to make the investment climate more attractive, economic mishandling is adversely affecting output, which is pressurised by hyperinflation. Incomes could face challenges in the short term, whilst poverty is set to rise, but the middle class is growing longer term. Mobile adoption is very strong, but innovation potential is lacking.
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