PESTLE Analysis of Sri Lanka

Sri Lanka PESTLE Analysis

by Shamsul
Sri Lanka PESTLE Analysis
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PESTLE Analysis of Sri Lanka


Sri Lanka is a South Asian country which is also called Ceylon. The country’s official name is the Democratic Socialist Republic of Sri Lanka. The Gulf of Mannar and Palk Strait separate the country from the Indian Sub-continent. Sri Jayawardenepura Kotte is the capital city of Sri Lanka, but its largest city and trade hub is Colombo. Let’s read the PESTLE analysis of Sri Lanka.

The total area of Sri Lanka is 65,610 km2. In terms of area and size, it is the 120th largest country in the world. In 2020, the total population of Sri Lanka was 21.92 million. Sri Lanka has rich culture and history when it comes to history and culture. Its geographic location played a major role in history from a different POV.

Portuguese invaded the country in the 16th century accidentally and controlled it. Then Dutch colonists occupied the country and kicked out the Portuguese. During the period of 1815-1948, British colonists ruled the country. Today, we will discuss the PESTLE analysis of Sri Lanka by identifying its political, economic, social, technological, legal, and environmental factors. The impact of these factors is really huge on the country. Here’s the detailed analysis of Sri Lanka,

Political Factors | PESTLE Analysis of Sri Lanka

  • Government System:

In Sri Lanka, there is semi-presidential form of government and administration. There is a cluster of democratic parties in the country. The government of Sri Lanka consistently organizes elections among these democratic parties. The party that gets the maximum number of votes forms the government. In the past, the country had not very good relations with India. But, they have resolved their conflict peacefully. On the other hand, Sri Lanka has very good relations with other regional countries such as Pakistan and China.

  • Alliances:

Above all, the country has alliances and membership with some of the world’s top institutions like the World Bank, IMF, Asian Development Bank, SAARC, the UN, G77, the Colombo Plan, NAM, and the Commonwealth of Nations.

  • Political Challenges:

The Sri Lankan political system has no freedom of speech, political dominance, and positive encouragement. They oppress these factors, which make the country highly volatile. It is imperative for the Sri Lankan government to introduce reforms in human rights, minorities, and the community. These factors are important for achieving political stability in the country.


Economic Factors | PESTLE Analysis of Sri Lanka

  • Gross Domestic Product:

In 2020, the annual gross domestic product (GDP) of Sri Lanka was 81.120 billion dollars. It was the 66th highest in the world at that time. Similarly, in the same year, the country’s per capita income was 3697 dollars, and it was 113th highest in the world.

  • Foreign Direct Investment:

According to economists and World Bank, the country’s economy is struggling and facing some major challenges. Currently, its economy is shifting towards urbanization and industrialization. Such efforts can help Sri Lanka to bring new investors in the country. China is the main investor in Sri Lanka.

  • Imports and Exports:

Ladies’ undergarments, tea, and vegetables are some of the main exports of Sri Lanka. Sri Lanka exports these things to India, UK, the USA, Italy, and Germany. Gold, knitted fabrics, refined petroleum, and cars are its main imports. Sri Lanka imports these things from China, India, Malaysia, UAE, and Singapore.

  • Economic Challenges:

Just like political challenges, Sri Lanka is also experiencing some important economic challenges. In order to improve the economy, the government should take some aggressive initiatives to address economic concerns. Unemployment, increasing food prices, and inflation are some critical economic challenges the country is facing right now.


Social Factors| PESTLE Analysis of Sri Lanka

  • Demography:

21.92 million people are populating the country. The majority of people follow Buddhism. Approximately 70 percent of people are Buddhist, and the remaining ones are minorities. The average life in Sri Lanka is 72 to 78 years. It is because of the clean air and natural landscapes. The most surprising element about Sri Lanka is that it has a literacy rate of 92 percent, which is quite commendable.

  • Cultural Diversity:

The socio-cultural diversity in Sri Lanka is very strong because it is a home of ethnic groups and other groups. When it comes to culture, Sri Lankan culture is quite like India.

  • Social Challenges:

Discrimination towards gender, caste, religion, and other factors is huge in Sri Lanka. Moreover, the higher unemployment rate is another sign of worry. In short, Sri Lanka is facing severe social challenges. They depend heavily on agriculture, and growing population is another concern.


Technological Factors | PESTLE Analysis of Sri Lanka

  • Adopting Technology:

Sri Lankan government has realized the importance of technology and science. Due to this reason, government and national institutions are taking the necessary initiatives to make the country digital. But, they require a lot of investment and resources to do so. According to studies, the computer literacy rate in the country is just 30 percent which is really poor.

  • Technological Trends:

Many e-commerce stores are working hard in the country. It is because people now prefer online shopping in Sri Lanka. Moreover, a major portion of the population loves to use social media websites and apps like Facebook, YouTube, Twitter, Instagram, LinkedIn, and Messenger. But, the use of these social sites is really negative as they spread false information.


Legal Factors | PESTLE Analysis of Sri Lanka

  • Regulations:

Surprisingly, the judicial and legal system is quite confusing in the country. Moreover, they don’t distinguish between international and local workers. The minimum wage is 10000 Rupees (50 US dollars). Surprisingly, some regulations and a flawed legal system make the country a little risky for foreigners.


Environmental Factors | PESTLE Analysis of Sri Lanka

  • Environmental Problems:

Factors like deforestation, overfishing, and industrial development are causing environmental problems in Sri Lanka, such as water pollution, poor waste management, air pollution, land pollution, water pollution, and more. These signs are really threatening and can cause serious trouble in the future.

  • Tourism Industry:

Indeed, there is no doubt that Sri Lanka is one of the most beautiful countries in the world with some scenic greenery, natural landscapes, and captivating weather. It has the potential to attract tourists worldwide, but its bad reputation is creating problems. However, the country has everything that a tourist country can offer.


Final Thoughts | PESTLE Analysis of Sri Lanka

This study shows that Sri Lanka is a beautiful country with massive potential. It is one of the developing countries. Factors such as poverty level, inflation, lack of technological resources, and environmental problems are hurting the country’s image globally. In order to take the lead, Sri Lanka should invest in the tech industry. In general, you will love visiting this country.


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