Building Resilience: How the Sri Lanka Economy is Shifting Toward Stability

Arjun Mehta19:50 23.10.20265 min read

Why is the Sri Lanka economy shifting toward resilience?

President Anura Kumara Dissanayake announced on October 23, 2025, that the nation is prioritizing a structural shift to protect the Sri Lanka economy from global volatility. This move follows a period of extreme instability and aims to prevent a repeat of the 2022 collapse by building defenses against external shocks. The strategy focuses on moving away from a reliance on luck and toward a system capable of absorbing international crises.

What caused the previous economic collapse?

The crisis was driven by an inability to generate enough revenue and a failure to secure necessary foreign exchange. These two factors created a massive funding gap that left the state unable to meet its basic financial obligations to citizens and creditors.

According to News 1st, Anura Kumara Dissanayake identified two primary triggers. First, the government could not produce sufficient revenue, which forced the state to print money or borrow from the banking system. By 2022, the Treasury account was operating with an overdraft of nearly Rs. 700 billion, according to News 1st.

The second trigger involved a lack of foreign currency. The country struggled to earn the dollars required to sustain its economy. This vulnerability meant that when external pressures arrived, the state lacked the reserves to manage them, leading to the unprecedented hardship experienced by the population.

How has the financial position changed recently?

The nation has seen a significant turnaround in its external financial position through improved current account balances. While historical successes were small, recent figures show a much larger surplus that provides a buffer against instability.

According to News 1st, 2025 marked a major shift. Throughout the country's history, there were only three occasions where a positive current account balance was recorded, totaling roughly US$300 million. In contrast, the country recorded a current account surplus of approximately US$1.8 billion in 2025, according to News 1st.

The Institute of Policy Studies of Sri Lanka (IPS) provides additional context on growth. The IPS reports that real GDP growth reached 5% in both 2024 and 2025. Growth continued into the first half of 2026 at a rate of 4.7%, according to the IPS. This follows a period where inflation moderated and external debt restructuring progressed.

What external threats still exist?

Global conflicts and energy price volatility remain the primary threats to stability. These external factors can drive up the cost of essential imports and drain the foreign currency reserves that the country has worked to rebuild.

The conflict in the Middle East has placed pressure on energy costs, according to News 1st. The President noted that the country spent approximately US$4 billion on oil imports during all of last year. However, that same amount of US$4 billion had already been spent by the end of August 2025, according to News 1st. If this trend holds, annual oil costs could exceed US$6 billion.

Beyond energy, the IPS warns that climate-related disruptions pose risks. Recent events, including Cyclone Ditwah, have highlighted the need for better disaster preparedness. These shocks can impact the tourism industry and reduce the foreign remittances sent home by workers abroad, according to News 1st.

How does the labor market affect stability?

A large portion of the workforce operates without formal protections, which weakens the overall economic foundation. This reliance on informal employment makes the population more vulnerable to economic shifts and limits the benefits of growth.

According to the IPS, two-thirds of Sri Lankan workers remain in the informal sector. This situation highlights persistent weaknesses in job quality and employment security. The IPS argues that the country must address skills shortages and productivity gaps to ensure growth is sustainable.

To fix this, the IPS suggests that the nation must move away from debt-financed spending and import-intensive consumption. Instead, the country needs to attract private investment and develop a more competitive export sector. Strengthening the labor market through better social protection is a key requirement for long-term stability, according to the IPS.

How does each side view the path forward?

The government and policy researchers both agree that resilience is necessary, but they focus on different aspects of the solution. The government emphasizes shielding the state from external shocks, while researchers focus on internal structural reforms.

The government's position focuses on macro-stability and shielding the country from global volatility. Anura Kumara Dissanayake stated his intent to build a system that can absorb outside pressure.

"We must build an economy that can withstand shocks coming from outside our borders. That is exactly what we are planning to do,"

said Anura Kumara Dissanayake, President of Sri Lanka.

The IPS position focuses on the domestic workforce and productivity. The IPS argues that long-term ambitions depend on reforms that improve productivity and ensure economic benefits are shared broadly. They advocate for investments in renewable energy, food systems, and infrastructure to reduce vulnerability.

What happens next?

The government will continue to manage the pressure on the dollar while trying to maintain stability. The IPS report, Sri Lanka: State of the Economy 2026: Policy Choices for Durable Growth, provides a roadmap for these reforms.

Policymakers face the immediate task of managing oil import costs, which are trending toward US$6 billion annually. The country must also address the high rate of informal employment. Future stability will depend on whether the state can successfully implement the IPS recommendations regarding trade, fiscal management, and human capital development.

Frequently Asked Questions

Why did Sri Lanka face an economic crisis?
The crisis was caused by the government's inability to generate enough revenue and a lack of foreign exchange to pay for imports, according to Anura Kumara Dissanayake.

Is the Sri Lankan economy growing now?
Yes, the IPS reported real GDP growth of 5% in 2024 and 2025, with 4.7% growth in the first half of 2026.

What are the main risks to the recovery?
External shocks like Middle East conflicts, rising oil costs, and climate-related disruptions like Cyclone Ditwah pose major risks, according to the IPS and News 1st.

Sources

Chips & Rare Earths

Massive Orders Signal Potential Nvidia China Export Approval Breakthrough

Reports indicate that major Chinese technology firms have placed massive orders for Nvidia hardware, potentially signaling a breakthrough in the nvidia china export approval process. However, these orders face immediate hurdles from production capacity constraints and ongoing geopolitical tensions between Washington and Beijing. What are the reported chip orders from China? Chinese technology giants have reportedly placed orders for millions of Nvidia workstation graphics cards to support artificial intelligence development. These orders represent a massive surge in demand for hardware that bypasses some of the strictest data center chip restrictions. According to The Motley Fool , on October 20, 2026: Chinese companies including ByteDance , Alibaba , and Tencent have ordered more than 3 million Nvidia Blackwell chips, with a collective value of $35 billion . Other reports suggest the scale may be even larger. According to AOL Canada , on October 20, 2026: Total orders from Chinese customers have exceeded 6 million units . These orders specifically target the RTX PRO 5500 workstation cards, which are valued at approximately $11,400 per unit. While the top-tier Blackwell B300 chip is barred from the Chinese market, these workstation cards are being sought primarily for AI inference tasks. Why might Nvidia fail to fulfill these orders? Nvidia faces a severe production bottleneck that makes fulfilling the full volume of Chinese requests nearly impossible. The company lacks the manufacturing capacity to meet the sudden influx of orders while simultaneously serving its global customer base. According to AOL Canada , on October 20, 2026: Nvidia may only be able to fill 5% to 10% of these orders. The company has indicated it can produce at most 3 million Blackwell chips globally in 2027, which is significantly lower than the demand coming from China alone. The shortage is driven by manufacturing limitations at Taiwan Semiconductor Manufacturing Company (TSMC) . As reported by AOL Canada , on October 20, 2026: TSMC is reserving most of its 2027 wafer capacity for the next-generation Rubin chips, which directly limits the availability of cards for companies like Alibaba . How do the US and China view these chip sales? The two nations hold conflicting views on the impact of semiconductor trade. The United States focuses on national security and preventing advanced AI capabilities from reaching China, while China seeks to maintain access to essential hardware for its tech industry. How each side tells it: The United States: The administration has cited national security concerns to justify export controls. According to The Motley Fool , on October 20, 2026: The Trump administration imposed new tariffs in 2025 and required Nvidia to obtain export licenses for data center chips. China: Chinese regulators are looking for ways to keep their AI sector moving. According to Ars Technica , on September 2026: China's Ministry of Industry and Information Technology has asked firms like Alibaba and ByteDance to share plans to buy RTX Pro 5500 chips to power domestic AI models. Nvidia itself has advocated for more flexible trade rules. An Nvidia spokesperson stated that Chinese workstation chipmakers have seen "unprecedented growth since 2022" because of "outdated US export controls" and Chinese import limits, as reported by AOL Canada . What is the history of these export restrictions? The tension over high-end semiconductors is not a new phenomenon. It has been a central friction point through multiple US presidential administrations, evolving from general trade concerns to specific technology bans. The following timeline outlines the regulatory environment: Pre-2025: Both the Biden and Trump administrations cited national security concerns regarding the sale of advanced chips to China. April 2025: The Trump administration informed Nvidia that it would require specific export licenses to continue selling data center chips to Chinese companies, according to The Motley Fool . Recent Negotiations: Nvidia CEO Jensen Huang met with Donald Trump on several occasions and lobbied regulators, eventually reaching a deal where Nvidia would cede 15% of its Chinese chip sales to the government. How are these curbs affecting China's industry? US restrictions are acting as a catalyst for China to accelerate its own internal semiconductor development. Rather than stopping progress, the bans are forcing a shift toward domestic self-reliance. According to The Economic Times , on October 23, 2026: Nvidia CEO Jensen Huang stated that US export restrictions have accelerated China's efforts to build its own semiconductor industry. He believes these restrictions have compressed China's development timeline from 10 years down to 5 years . China is expanding its manufacturing footprint beyond just chips. Huang noted that China is investing heavily in supporting infrastructure, including memory, power generation, cooling systems, solar technology, and batteries, according to The Economic Times . What happens next for Nvidia and its investors? The immediate future depends on whether Nvidia can clear the production hurdles and how much of the reported $35 billion in orders can actually be delivered. Investors are looking for clarity on the company's ability to turn these orders into real revenue. Key upcoming milestones include: December 2026: Early samples of the requested hardware are expected to be delivered. Q1 2027: Commercial deliveries of the workstation chips are scheduled to begin. November 18, 2026: Nvidia's next earnings call will be a critical moment for investors to confirm the magnitude of the Chinese orders and the company's capacity to fulfill them. Investors will also watch for updates on the Blackwell and Rubin chip cycles. While current guidance for the third quarter of fiscal year 2027 is approximately $108 billion , that figure explicitly excludes any revenue from China's data center compute sector, according to AOL Canada . Frequently Asked Questions Why can't Nvidia sell its best chips to China? The US government has imposed export controls on high-end AI chips like the Blackwell B300 to prevent China from using them for advanced military or AI applications. Which Chinese companies are buying Nvidia chips? Major tech firms including ByteDance, Alibaba, and Tencent have reportedly placed large orders for Nvidia's RTX PRO 5500 workstation cards. Can Nvidia fulfill all the orders from China? It is unlikely. Industry sources suggest Nvidia may only be able to fulfill between 5% and 10% of the total requested orders due to manufacturing limits at TSMC.

Grace Lin·06:26 26.10.2026

China & Taiwan

Survey reveals deep AI literacy divide in rural Nebraska

Survey finds sharp AI knowledge gap among rural Nebraskans by age, schooling and income A new Nebraska Rural Poll shows that most rural Nebraskans have limited knowledge of artificial intelligence and that familiarity with AI varies strongly by age, education and income . The findings place Nebraska’s rural communities squarely inside a broader national pattern in which younger, more educated and higher‑income residents are far more likely to use and understand AI tools than their older and less advantaged neighbors. Most rural Nebraskans say they know little about AI The 2024 Nebraska Rural Poll, conducted by the University of Nebraska–Lincoln, asked thousands of rural residents how much they know about artificial intelligence and whether they use AI tools. Just over half of respondents — 53% — said they are not at all or only slightly informed about AI. About 34% described themselves as moderately informed, while only 13% reported being very or extremely informed. Usage figures were similarly modest. Roughly 27% of rural Nebraskans said they have used AI tools such as chatbots or automated writing assistants, meaning nearly three‑quarters have never tried them. Researchers note that this relatively low level of engagement raises concerns about whether rural communities will be able to fully participate in AI‑driven economic and civic changes. Age is a major dividing line Age emerged as one of the strongest predictors of AI experience in the Rural Poll. Among Nebraskans under 30, a majority — 55% — reported using AI tools, in stark contrast with older residents. Only about 9% of those aged 65 and older said they had used AI. Younger adults were also much more likely to say they are very or extremely informed about AI. This age divide parallels national survey data. A 2025 Pew Research Center study found that about 62% of U.S. adults under 30 had heard or read “a lot” about AI, compared with just 32% of adults 65 and older. Other research has shown that AI use tends to peak in early to mid‑career years and declines steadily after age 60. Education and income strongly linked to AI use The Nebraska Rural Poll report shows that people with more education are far more likely to have experimented with AI tools. About 40% of respondents with at least a four‑year college degree reported using AI, compared with only 4% among those with a high school diploma or less. The survey also found higher usage among people in management, professional, education, food service and personal care jobs, which tend to require more formal training. Household income tells a similar story. Rural Nebraskans with higher incomes were more likely to say they had tried AI tools and to report feeling at least moderately informed about the technology. Nationally, a Phoenix Center analysis of more than 7,000 U.S. adults found that AI use and AI awareness both rise with income and education while declining with age. A separate Rutgers University survey likewise reported that higher‑income and college‑educated Americans use AI more often, trust it more and demonstrate greater knowledge about how it works. Limited confidence that AI serves the public interest Beyond awareness and usage, the Nebraska Rural Poll explored how residents feel about AI’s broader impact. Many respondents said they are not confident that AI is being used in the best interest of the public. That skepticism was particularly strong among those who felt least informed, suggesting that low literacy may be fueling mistrust. National research points to similar tensions. While more educated and higher‑income Americans tend to trust AI more, surveys consistently find worries across demographic groups about job loss, misinformation and privacy. For rural communities, where economies often rely on agriculture, small business and local services, the stakes of how AI reshapes work and communication may feel especially high. Nebraska’s broader digital readiness challenge The new findings on AI land in a state that already faces structural challenges in technology readiness. A recent analysis ranked Nebraska as the 20th least prepared state for the AI economy based on jobs, education and government funding. The report cited relatively weak federal support for tech‑oriented small business innovation and below‑average rates of AI‑related degrees among Nebraskans in their early twenties. Earlier studies of digital readiness in Nebraska also found large gaps tied to age, income and educational attainment, with smaller differences between urban and rural counties. Those same divides now appear to be shaping who knows about AI and who feels left behind. Call for education and outreach in rural communities Researchers behind the Rural Poll say the results underscore the need for targeted education and outreach if rural Nebraskans are to benefit from AI rather than be sidelined by it. They argue that improving AI literacy — from basic definitions to practical examples in agriculture, health care and local government — could help residents make more informed decisions and evaluate risks. The pattern found in Nebraska mirrors broader academic work showing that younger people with tertiary education and mid‑ to high‑income levels use a wider range of AI tools, report greater confidence and rely on AI for more complex tasks. Without deliberate efforts to close those gaps, experts warn that AI could deepen existing inequalities in economic opportunity, civic participation and access to information.

Sara Lindqvist·07:39 21.07.2026

Southeast Asia

Leaders seek peace measures to resolve thailand cambodia border conflict

Thai Prime Minister Anutin Charnvirakul and Cambodian Prime Minister Hun Manet met in the Philippines to agree on new trust-building measures intended to stabilize a fragile ceasefire. This meeting, held on the sidelines of the 48th ASEAN Summit in Cebu, comes as the two nations attempt to manage the long-term fallout from the thailand cambodia border conflict that saw heavy fighting in July and December of last year. What are the new agreements between the two nations? The leaders agreed to task their respective foreign ministers with pursuing practical confidence-building measures to restore bilateral trust. While no major breakthroughs were announced, the meeting marked a willingness to resume discussions on sensitive border issues that have stalled for months. According to The Diplomat , May 2026: Prime Minister Anutin Charnvirakul stated that the two sides will focus on areas where they have common ground to rebuild their relationship. He emphasized that the nations must move forward together in a step-by-step manner. Philippine President Ferdinand Marcos Jr., acting as the ASEAN chair, confirmed that the ASEAN Observer Team (AOT) will continue monitoring the ceasefire. The mandate for this monitoring team has been extended for three months, lasting until July. President Marcos noted that the meeting was possible due to a shared belief among the leaders that the time for war has passed. How do the two sides view the current border situation? The two governments hold differing perspectives on the legitimacy of territorial claims and the methods required to resolve them. While Thailand seeks practical cooperation, Cambodia insists on strict adherence to existing legal frameworks and previous ceasefire agreements. How each side tells it: Thailand: Prime Minister Anutin Charnvirakul has focused on "practical confidence-building measures" to stabilize the frontier. While Thailand recently cancelled a 2001 MoU regarding joint offshore energy exploration, Anutin denied this move was directly linked to the land border disputes. Cambodia: Prime Minister Hun Manet maintains that the border cannot be changed through force or "fait accompli." According to The Diplomat , May 2026: Manet called for the immediate resumption of survey and demarcation work under the Joint Border Commission (JBC). What was the scale of the recent military violence? The conflict involved significant loss of life and widespread displacement of civilians. Fighting included Thai air strikes and heavy exchanges of artillery and rockets across the disputed land border during the outbreaks in July and December of last year. According to BBC Thai , July 2025: The human cost was high, with reported deaths totaling 29 for Thailand and 13 for Cambodia. Specific figures from the Thai side indicated 15 military deaths and 192 injuries, while Cambodian defense spokesperson Lieutenant General Mali Socheata reported 8 civilian deaths and 5 military deaths during the July 24-25 period. The displacement of people has reached massive proportions. According to BBC Thai , July 2025: Thai authorities reported that over 800,000 people were affected in seven border provinces, with approximately 187,974 people residing in 730 shelters. On the Cambodian side, Lieutenant General Mali Socheata reported that 172,094 refugees were spread across five main provinces, including Siem Reap and Preah Vihear. How has the conflict impacted the regional economy? The border tensions have caused severe economic disruption, particularly affecting trade and labor mobility. Because the border remains mostly closed, land-based trade has been virtually eliminated, impacting essential goods like petroleum and agricultural products. According to East Asia Forum , June 2026: Cambodia is facing higher economic vulnerability because it relies more heavily on trade with Thailand. Cambodian imports from Thailand dropped from US$3.4 billion in 2024 to US$2.92 billion in 2025. Labor markets are also under strain. Thailand faces a demographic crisis and depends on Cambodian workers for "3D" (dirty, dangerous, and demanding) jobs in construction and restaurants. The conflict makes recruiting these workers difficult, while Cambodian returnees face insecure, low-productivity employment. According to East Asia Forum , June 2026: Cambodia reported as many as 600,000 internally displaced persons during the height of the conflict. Why are journalists facing legal action in Cambodia? The political atmosphere remains tense, with the Cambodian government taking legal action against individuals criticizing border policies. This has occurred while the country prepares for upcoming election cycles. According to UCA News , May 2026: Four journalists, including members of KSP TV Live and PPS News, are set to appear in a provincial court following a confrontation at the Thai border. While police alleged the journalists were drunk and inciting violence, their editors claim the incident was a "premeditated scheme to entrap" them. The crackdown follows a pattern of legal actions against critics. UCA News , May 2026: reports that more than 30 people have faced courts for criticizing government border policies, including social activist Him Mom, who was jailed for two years for her social media posts regarding the conflict. What happens next for the border regions? Future stability depends on the ability of foreign ministers to move from high-level agreements to technical cooperation. The immediate focus will be on the Joint Border Commission and the continued oversight of the ceasefire. The following steps are currently in motion: The ASEAN Observer Team (AOT) will continue to monitor the ceasefire through July 2026. Foreign ministers from both nations are tasked with initiating practical discussions to find common ground. Cambodia is seeking a formal resolution of maritime overlapping claims through the United Nations Convention on the Law of the Sea (UNCLOS). Cambodian authorities are calling for the resumption of survey and demarcation work under the Joint Border Commission (JBC). Frequently Asked Questions Why is the Thailand-Cambodia border closed? The border has remained largely closed for over a year due to the deterioration of diplomatic relations and recent outbreaks of armed conflict. How many people were displaced by the fighting? Estimates vary, but reports indicate that hundreds of thousands of people were displaced, with Cambodia reporting up to 600,000 internally displaced persons. What is the role of ASEAN in this conflict? ASEAN provides an Observer Team to monitor the ceasefire and facilitates diplomatic meetings between the two prime ministers to encourage peace.

Sara Lindqvist·13:31 23.10.2026