By Dushni Weerakoon

The conventional wisdom is that a growing economy helps the incumbent, and a weakening one helps the opponents. However, the effects of economics on election outcomes are never straightforward. Sri Lanka’s presidential election, held in September, came in the middle of a steady recovery from a debilitating economic crisis two years ago. Despite this, the election results saw a political transition, from a seasoned politician who has previously held the post of prime minister on five different occasions to an untested candidate from a political party out of the mainstream.

Anura Kumara Dissanayake, the leader of the Marxist-oriented Janatha Vimukthi Peramuna (JVP) party, obtained 42% of the popular vote—up from just 3% of votes in the last presidential election in 2019. It is the first national electoral success for the JVP, and to capitalize on this turnabout, the new president swiftly called for a parliamentary election for this November.

What seems certain is that, in the presence of widespread economic disruptions, changes in voter alignments and other unpredictable behaviour can be expected. At the peak of Sri Lanka’s 2022 economic crisis and sovereign default, food and fuel shortages were accompanied by spiralling inflation and a tumbling currency—at unprecedented magnitudes of 70 and 80%, respectively.

The economy has come a long way since. Annual inflation is at a low 2%, the exchange rate is stable having regained some of its lost value, and output growth is strengthening. Sri Lanka will likely end 2024 with a GDP growth rate of around 4% double the International Monetary Fund’s (IMF) 2% projection. On these fundamentals, a reasonably speedy debt restructuring deal with bilateral creditors and bondholders has also been concluded.

But the message of a recovering economy was insufficient to convince large swaths of disillusioned voters. The crisis itself saw a doubling of Sri Lanka’s poverty rate. While the most disadvantaged people did receive some support, stringent austerity measures demanded by an IMF program signed in March 2023 hit hard. Public sector wage freezes, tax increases and spending cuts ate into living standards already eroded by high inflation. Voters most likely asked themselves whether they were better off today than they were two years ago.

Whatever the proximate cause, harsh economic conditions sow the seeds of discontent. They also heighten legitimate fears of violence. In fact, Sri Lanka experienced a burst of violence at the worst moment of the 2022 downturn. Simmering tensions can crystalize more particularly in a volatile election environment—especially if politicians are inclined to lend a helping hand with divisive campaigns.

Despite the traumatic legacy of the economic crisis, Sri Lanka’s polls have since proved to be free of violence during or in the aftermath of the elections. In fact, the peaceful political transition was even more significant given that the presidential race was won on a minority vote for the first time in the country’s history. There are many explanations for this outcome. The first of these relates to the remaking of the JVP itself. Associated with two violent anti-government uprisings in the 1970s and the 1980s, the party was keen to reassure voters and largely avoided acrimonious electioneering. The focus was on a unifying theme of anticorruption rather than the more divisive issues of economic policy or local government power-sharing arrangements. At the same time, the JVP candidate also diluted the party’s more traditional hard-left positions, especially on economic matters, to broaden the voter base.

The second set of reasons relates to the voters themselves. The economic shock focused the public’s attention more intently on who should be held responsible. This resulted in the political collapse, for now, of the Mahinda Rajapaksa-led Sri Lanka Podujana Peramuna (SLPP) party, which was in power at the height of the crisis. Ranil Wickremesinghe, leader of the United National Party (UNP), stepped in when the Rajapaksas were forced out. Despite being the candidate responsible for rescuing the economy he, too, suffered an electoral bruising, belying the tenet of a stronger economy helping an incumbent. In addition, the widespread nature of the economic shock—across population and income groups—meant larger numbers who were ready to switch party allegiances. Those groups’ disgruntlement with mainstream parties, held responsible for corruption and missteps leading to decades of economic mismanagement, led them to an outsider candidate.

But while Sri Lanka successfully navigated out of a danger zone, an outbreak of social unrest need not be necessarily confined to the devastation from a sudden crisis. Unrest can arise from slow-burning issues tied into perceptions of relative economic decline—blamed on migration or free trade, for instance. Discontent finds fertile ground in election campaigns as seen in recent US elections, where such issues couched around identity, culture, and security have proven to be deeply polarizing. In Sri Lanka, the challenging party was vigilant about avoiding inflammatory rhetoric. Such a concerted effort needs to be adopted by both parties in the United States in order to minimize the chance of disruption.

For now, Sri Lankans are relieved that this very consequential election and power transfer went smoothly. Peaceful elections, though, have not solved the country’s economic problems. The road to a durable recovery from an economic crisis and sovereign default is a long and hard one. The new president and his party will have to deliver on promises to improve standards of living, a fairer society, and a cleaner government if it is to retain the large numbers of swing voters.

On the campaign trail, all candidates held out populist promises ranging from wage increases to tax reductions. The JVP is likely to be more interventionist on economics, but the stranglehold of the IMF program means that promises can be delivered only at the margin by tweaking taxes and spending. A more thorough overhaul risks disrupting the program’s targets and timelines. If that were to occur, even the very limited foreign finance available to Sri Lanka would begin to dry up and perhaps turn out to be the precursor to another foreign exchange crisis. While the JVP has won a remarkable victory, Sri Lanka’s search for economic, political, and social stability continues.

-Dushni Weerakoon is the executive director of the Institute of Policy Studies of Sri Lanka and this article was originally featured on foreignpolicy.com