The Civil War's Economic Costs

How the 1983-2009 civil war cost Sri Lanka lives, investment, tourism and growth, and how the post-war boom was financed.

Sri Lanka’s civil war lasted from 1983 to 2009.

Human cost

The war between the government and the LTTE killed tens of thousands and displaced many.

Economic costs

Defence spending rose sharply, diverting money from development.
Tourism suffered from attacks.
Investment was deterred.
The north and east were devastated.

Estimates

Economists estimated the war cost Sri Lanka a large share of potential GDP over decades.

Post-war boom

After 2009:

Growth surged to around 8 percent in some years.
Infrastructure spending in the north and east.
Tourism recovered.

Borrowing

Much post-war infrastructure was financed through foreign borrowing, including commercial loans and bonds, sowing seeds of later debt problems.

Peace dividend

Ending conflict can free resources for growth, but reconciliation and inclusive development matter.

The reopened highway

After the war ended, the road to Jaffna reopened, allowing trade between the north and the rest of the country for the first time in years.

Thinking wars only cost lives

They also cut investment, tourism and growth for decades.

Key takeaways

The civil war lasted from 1983 to 2009.
Defence spending and lost tourism and investment were costly.
Post-war growth surged to about 8 percent.
Foreign borrowing funded infrastructure.