Sri Lanka, Oct. 16 -- Sri Lanka is experiencing a stronger-than-expected economic rebound but the challenge now is turning this post-crisis recovery into long-term, structurally driven growth, according to the Institute of Policy Studies' (IPS) 'Sri Lanka: State of the Economy 2025' report.

GDP growth reached 4.9 percent in the first half of 2025, underpinned by improved macroeconomic fundamentals.

"While this cyclical recovery is promising, the sustainability of growth will increasingly rely on productivity and efficiency gains," the IPS said in its report that was launched last evening, highlighting that deeper structural reforms are essential.

The think tank pointed to reforms in land and labour markets as well as opening up trade ...