After the cyclone: Can Sri Lanka’s economy recover?

Summary

Podcast Summary: Business Daily – “After the cyclone: Can Sri Lanka’s economy recover?”
BBC World Service | Host: Vishala Sripathma | Air Date: February 10, 2026

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Episode Overview

This episode of Business Daily explores the devastating aftermath of Cyclone Ditworth in Sri Lanka—an unprecedented natural disaster striking a country already fragile from years of crisis. Host Vishala Sripathma investigates the cyclone’s economic and human impact, sharing firsthand stories from business owners, community leaders, and economists. The central question: Can Sri Lanka’s economy truly recover, or is deeper transformation needed?

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Key Discussion Points & Insights

1. The Cyclone’s Devastation: A Compounded Crisis

• Cyclone Ditworth struck Sri Lanka with little warning, causing unprecedented damage: a third of the island devastated, hundreds of lives lost, homes destroyed, and widespread displacement.
• The nation was already reeling from decades of civil war, the 2004 tsunami, 2019 terrorist attacks, and a 2022 economic uprising.
• [01:54] Notable quote, Host Vishala:
  “According to the President, it’s the country’s worst ever economic disaster.”

2. Personal Losses & Community Impact

• Tea plantation workers in the hills bore some of the worst losses, wiping out families and livelihoods.
• [03:15] Heartbreaking survivor testimony:
  “My wife, son-in-law, daughter, mother-in-law, two grandsons are all dead... We have lost our land, house, everything.”
• Survivors remain in unsafe or makeshift housing, with education for more than 4,000 children disrupted. Infrastructure surveys are necessary before resettlement.
• [06:57] Dilhan Fernando (CEO, Dilma):
  “It’s not simply a case of telling people to go back to their homes, it’s rather rehousing them until...places are safe.”

3. Effects on Sri Lanka’s Essential Industries

• Tea—Sri Lanka’s iconic export—was hit hard. Facilities and communities suffered, but, as noted by Dilma CEO Dilhan Fernando, the damage, while significant, was less catastrophic than initially feared for the industry itself.
• [05:21] Fernando:
  “The primary impact was on the communities, on the lives that we lost... Where the industry was concerned, extreme weather...is something that we expect... The livelihoods, the educational continuity amongst children: these are some of the challenges that we face right now.”
• Around 30 major tea exporters had equipment damaged—potentially irreparably.
• Other agricultural sectors, particularly paddy rice, remain crippled due to flooded and salinated fields.

4. Building Resilience: Planning for Future Disasters

• There is increasing acceptance among some businesses that climate-related disasters are inevitable.
• [08:18] Fernando:
  “Rebuilding better or building back better is probably less a priority for them than building back at all and getting their lives together... The real issue is that we need to make sure this recovery is guided in a way that it connects recovery with resilience.”
• Many smaller enterprises cannot afford to prioritize resilience amid the urgency of mere survival and recovery.

5. Local Aid and Community Response

• NGOs like Palmera, led by Abanaraj, became crucial in filling gaps left by international and government responses, targeting the most overlooked areas—lactating mothers, infants, and those with urgent medical needs.
• [10:09] Abanaraj (Palmera founder):
  “People are coping in these areas like all Sri Lankan communities do... by being there for each other... there is a huge outpouring of goodwill by the local community and, of course, the global community.”
• [11:30] Abanaraj:
  “In just 11 days, Palmera has raised over a quarter of a million dollars from the public... and reached over 20,000 people across 11 districts. It’s been a huge undertaking.”

6. The Devastation of Tourism and Small Businesses

• Tourism, a pillar of the Sri Lankan economy, was just rebounding; sudden catastrophe forced entrepreneurs to start over.
• [14:27] Padham (Eco-camping business owner):
  “The cyclone cost, the loss to my business—it is beyond description... It will cost a lot to rebuild.”
• Government support for small businesses remains minimal—about $650 in relief per business owner, often insufficient for meaningful recovery.

7. National Economic Stalemate & Aid Shortfall

• Infrastructure and agriculture devastated; with much of the population relying on farming, the destruction of livestock and crops has far-reaching consequences for food security and basic livelihoods.
• [15:27] Dr. Ahilan Katherigamma (Economist, University of Jaffna):
  “A lot of the crops have been wiped out. A lot of livestock...have died... The destruction that we’ve seen in agriculture is also going to have a severe impact on people’s income streams and livelihoods.”
• Relief packages and external aid are insufficient.
  • Government package: 500 billion rupees (about 40% of the estimated 1.2 trillion rupees needed for recovery).
  • India: US$450 million pledge (majority loans).
  • IMF: US$200 million emergency loan.
• Under current IMF austerity conditions, Sri Lanka’s government is severely constrained in spending.
• Katherigamma warns of coming food insecurity and deep damage to education and health unless reconstruction intensifies rapidly.

8. Long-Term Economic Prospects

• Sri Lanka’s GDP is only now recovering to 2018 levels—a “lost decade” of growth.
• [18:36] Katherigamma:
  “We’ve effectively lost eight years or almost a decade in terms of growth... What is really needed is investment. Unless Sri Lanka is able to move out of the austerity conditions of the IMF, they won’t be able to do that.”

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Notable Quotes & Moments

• [01:54] Host Vishala Sripathma:
  “Cyclone Ditworth struck Sri Lanka without warning. The storm left a third of the island in ruins, hundreds of lives lost, homes destroyed, and hundreds of thousands displaced.”
• [03:25] Anonymous Survivor:
  “They were all I had. We have lost our land, house, everything.”
• [04:24] Dilhan Fernando (Dilma):
  “Ditworth is a cyclonic storm that emerged in a completely unnatural and new way... this is connected to global warming and it’s the warming oceans that are making weather systems so much more damaging.”
• [10:09] Abanaraj (Palmera):
  “Many are still in the shelters... and they’re not sure when they will return home... But there is a huge outpouring of goodwill by the local community and, of course, the global community.”
• [15:27] Ahilan Katherigamma (Economist):
  “This kind of disruption, where a country... in one way or another [is] connected to agriculture... is going to have a severe impact on people’s income streams and livelihoods.”
• [18:36] Katherigamma:
  “We’ve effectively lost eight years or almost a decade in terms of growth. A developing country like Sri Lanka should have grown by about 50% in a period of time like that.”

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Key Timestamps for Important Segments

• 1:33 – Human stories and personal losses (survivor testimony)
• 4:06–6:50 – Tea industry impact and adaptation (Dilhan Fernando)
• 8:09 – Disaster planning and recovery challenges
• 10:09–12:21 – Grassroots relief & NGO response (Abanaraj, Palmera)
• 14:18–15:08 – Tourism/business sector, firsthand account (Padham)
• 15:27–19:12 – Macroeconomic outlook and challenges (Ahilan Katherigamma)

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Conclusion

The episode paints a sobering yet nuanced picture: While Sri Lanka’s people and industries are resilient, the scale of disaster, underfunded recovery, and stringent international financial restrictions leave the nation’s recovery path precarious. The call to action is unmistakable: true economic healing requires more robust internal investment, less austerity, and a renewed global commitment to supporting Sri Lanka in building for resilience, not merely for survival.

Transcript

[A]

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[B]

Hello and welcome to Business Daily from the BBC World Service. I'm Vishala Sripathma. Today we're in Sri Lanka, an island long loved by tourists and and marketed as a tropical paradise. But right now it's picking up the pieces after a devastating cyclone.

[C]

In the days that the cyclone swept through Sri Lanka, I've met so many families who just in one night have lost everything and once again have to rebuild their lives from the ground up.

[B]

We'll hear from people and businesses impacted by the latest disaster to hit a country that that's already endured so many setbacks.

[D]

We've effectively lost almost a decade in terms of growth. A developing country like Sri Lanka should have grown by about 50% in a period of time like that.

[B]

That's Business Daily from the BBC. Cyclone Ditworth struck Sri Lanka without warning. The sound you're hearing is floodwater rushing through ordinary streets. Cars, furniture, even makeshift rafts carrying animals swept along in the current. The storm left a third of the island in ruins, hundreds of lives lost, homes destroyed and hundreds of thousands displaced. According to the President, it's the country's worst ever economic disaster. Among those affected are tea plantation workers in the hills who've lost family members and now wonder how they'll survive with their houses gone. My wife, son in law, daughter, mother in Law two grandsons are all dead. I don't have any protection here. This they were all I had. We have lost our land, house, everything. We live in this house behind. See the rocks are right next to our house.

[E]

Living here doesn't feel right for us. It doesn't feel safe to be living here.

[B]

Decades of civil war, a devastating tsunami 20 years ago and militant attacks in 2019 had left the economy fragile. An uprising in 2022 was sparked by the rising cost of living and has led to a sense of permanent crisis in Sri Lanka. In an attempt to recover, the nation requested a bailout from the International Monetary Fund.

[E]

I promise to keep green tea natural respecting a 5,000 year old tradition.

[C]

And I have kept my promise.

[E]

My Dilma green tea is all natural.

[B]

Tea is one of Sri Lanka's biggest industries. Dilma is one of the country's most famous brands employing over 20,000 people. Dilma's tea is sold around the world. Dilham Fernando is its chief executive and one of the country's most prominent business leaders.

[E]

Well, Ditois is a cyclonic storm that emerged in a completely unnatural and new way. And what we can see from the analysis, the discussion with scientists is that this is connected to global warming and it's the warming oceans that are making weather systems so much more damaging than they were. And in this instance it was no different. Sri Lanka was unprepared. Typically we have storm systems developing in the Bay of Bengal. In this case it was in a completely different. It is a very slow moving system and it therefore wreaked havoc. So our understanding from scientists is that there is a likelihood of a 30.

[B]

Year frequency when the cyclone hit. How did it impact your tea estates and also the communities around them?

[E]

Well, the primary impact was on the communities, it was on the lives that we lost. It was landslides, it was the people who were displaced. And so many found themselves in temporary emergency accommodation running to schools, to health care centers, to churches and temples. Terrible Saturday morning. But where the industry was concerned, extreme weather is something particularly where the monsoons are concerned, something that we expect. The regular frequency and losses are not inconsistent with what we would normally have had in the inter monsoonal period. However, the livelihoods, the educational continuity amongst children, these are some of the challenges that we face right now where the packing and the export sector connected to tea was concerned. Sadly we had I think nearly 30 of our significant tea export businesses that were affected by floods. The equipment we all use is high precision, not very tolerant of floods and particularly not of all the sand and all the junk that comes with floods. And so that was significantly or in some cases permanently damaging. I would say, all in all, the impact was much more manageable than what we initially expected.

[B]

And when we look at the workers and families that were directly affected, what are they dealing with right now, would you say?

[E]

I think it's primarily the housing. So many have returned to their homes, but the government has correctly mandated that unless a proper survey is done, you must remember that the soils that were affected, the rocks that were dislodged, all go back to the time of the pioneering time of the tea industry. And so some of the rocks that were blasted 200 years ago now moving as a result of this unexpected ferocity of ditwa. And so it's not simply a case of telling people to go back to their homes, it's rather rehousing them until we have a government agency that's conducting the surveys, until they get around to assessing and making sure the places are safe. So it's that while at the same time, probably the most significant challenge is with the education of their children, with over 4,000 children who need uniforms, who need school books, and in some cases who don't have schools to go back to, the challenges are significant. They are manageable, but they are significant.

[B]

Are businesses now planning for these sort of events, assuming a natural disaster will happen at some point, rather than wondering if it will?

[E]

Some are, but sadly many aren't. And the reason for that is that many can't afford to. They've recovered, they've had. If you look at agriculture, we're not sure how the next harvest will be. Many of the paddy fields are still damaged due to excess salinity due to sand washed down through the floods. And so people are still struggling to recover. Rebuilding better or building back better is probably less a priority for them than building back at all and getting their lives together. So I guess it's a reality that we have to confront. But it's up to responsible businesses, to government, to NGOs to be able to guide that recovery and to be able to support it. So I'm not saying by any means that we are out of the woods. Certainly relative to what we saw in the tsunami, we appear to be much better off in terms of the medium term impact. However, that doesn't mean that all is well and good. Sri Lanka had the fiscal space for the government to respond proactively in the way that it did, and the monies have reached the people. It's made a phenomenal difference. We're Seeing construction booming, we have few issues with materials and so on, but that is a detail. But the real issue is that we need to make sure that this recovery is guided in a way that it connects recovery with resilience.

[B]

Dilhan Fernando, chief executive of Dilma Abanaraj, founded the charity Palmera, which helps vulnerable communities rebuild. Palmera works mainly in the north and east regions already fragile after decades of conflict and chronic underinvestment.

[C]

You know, these are communities that have been impacted by the cyclone who were just beginning to recover from the years of economic strain, and now they're facing another blow to their livelihoods. And in the days that the cyclone swept through Sri Lanka, I've met so many families who just in one night have lost everything and once again have to rebuild their lives from the ground up. And many are still in the shelters that the government have set up, and they're not sure when they will return and home. And people are coping in these areas like all Sri Lankan communities do when they go through these tough times, and that's through being there for each other. They move to safety together. They're sharing food, they're leaning on their neighbors, NGOs like ours and the government. The government is coordinating relief as best it can. And there is a huge outpouring of goodwill by the local community and, of course, the global community, and food packages are moving to many of these areas by. By people who are, you know, filling up lorries and trucks and driving to these areas. But that also means that some areas are receiving too much food and others are receiving none. And because of this, Palmyra is working with the local governments, and we can be agile. And as we raise our money from the public, we can move quickly into unreached areas and target the needs often overlooked. So we can be really focused on lactating mothers, newborns, sanitation items, critical medicine, nutrition for children, as well as the important dry rations and non and non food critical items as well for these families. So in just 11 days, Palmyra has raised over a quarter of a million dollars from the public, largely from the diaspora. We've raised funds from Australia through to London. You know, restaurants have held fundraisers, people have launched online appeals. And because of all this generosity, we've reached over 20,000 people in just these 11 days across 11 districts. It's been a huge undertaking.

[B]

Abanaraj there, the founder of the charity Palmera, which helps families across Sri Lanka. You're listening to Business Daily from the BBC World Service with me, Vishala Sripathma.

[C]

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[E]

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[C]

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[B]

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[C]

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[B]

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[C]

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[B]

Today we're examining the impact of a devastating cyclone on the people and businesses of Sri Lanka.

[D]

Sri Lanka.

[E]

This is a country we've heard so many good things about and have dreamt.

[D]

Of visiting for years.

[E]

A small teardrop shaped island off the.

[C]

Coast of India, Kiriketia is our new favorite travel destination and probably the most favorite place we have ever been in our entire life.

[B]

Social media influencers there very excited about Sri Lanka. More than 2 million tourists visit Sri Lanka every year. It's a vital part of the economy. Padham runs a eco camping business in the hills.

[E]

I started this about three years ago. It's a beautiful place.

[B]

The cyclone changed everything overnight.

[E]

The cyclone cost you lost to my business. It is beyond description.

[B]

What will it take to rebuild your business?

[E]

If we calculate the loss, it will cost a lot to rebuild it. The destroyed building need to be rebuilt. Currently I have been given 2 lakhs rupees by Ministry of Industries but is.

[B]

Not an odd so around $650.

[E]

The impact of the cyclone on my.

[D]

Business is very severe.

[B]

Business owner pardon there. The economy was only just finding its footing after the financial crisis. Ahilan Katherigamma from the University of Jaffna in Northern Sri Lanka explained to me what this disaster means and why many argue the International Monetary Fund bailout won't be enough to steady the country.

[D]

Infrastructure has been devastated in some parts of the country. When it comes to agriculture, a lot of the crops have been wiped out. A lot of livestock, cows, goats have died. So this kind of disruption where a country with a large section of our population in one way or another connected to agriculture, you know, somebody might be a schoolteacher, but they might also have a small farm on the side. So they depend on these multiple sources of income, including from agriculture, for their survival. So in that sense, the destruction that we've seen in agriculture is also going to have a severe impact on people's income streams and livelihoods.

[B]

In terms of aid and relief, we hear about other countries that have pledged aid or we hear about the government packages that are meant to be deployed to people affected. Is that enough?

[D]

It certainly is not enough. So US$4.1 billion, just the amount of destruction is equal to about 1.2 trillion rupees. What the government package that they recently passed in Parliament only amounts to 500 billion rupees. So about 40% of the amount of just the destruction. And that's very little compared to what we really need in investment to get the economy going. And this is because Sri Lanka is in an IMF program with severe austerity conditionalities, which means the government is in a straitjacket, so to speak, where it cannot spend and can't spend what it needs to get the economy going. The Indian government has been the most generous with about US$450 million, of which 350 million is a loan and US$100 million grant. But other than that, there hasn't been much coming from external actors. The IMF has given an emergency loan of US$200 million. But when you look at the big picture, this really does not bode well in terms of the rebuilding and reconstruction efforts. In a few months time we could be facing a food insecurity situation, for example. I also do some amount of research in the hill country, in the plantations and there, a lot of rural roads have been destroyed, which means that it's going to take much longer for children to get to schools because the transport cannot move through such destroyed roads, for example. So it will also have an impact on education and health. So some of these basic things like education, health, food, those could become serious concerns in the months ahead unless there is a rapid reconstruction effort.

[B]

Where do you think the growth is going to come from economically?

[D]

Sri Lanka's GDP will only recover to 2018 levels this year. So we've effectively lost eight years or almost a decade in terms of growth. A developing country like Sri Lanka should have grown by about 50% in a period of time like that. So what is really needed is investment. And that investment would create jobs and income streams. But unless Sri Lanka is able to move out of the austerity conditions of the imf, they won't be able to do that.

[B]

Aylin Katherigamma, an economist at the University of Jaffna, ending this program with a stark warning that Sri Lanka is not out of the woods yet. That's it for this edition of Business Daily with me, Vishala Sripathma. You can get more episodes of this program on the BBC website or wherever you get your downloads. Elijas presentado professor.