Sri Lanka seeks to foster growth after its economy contracted 3.8 percent last year, according to World Bank estimates.

“This move aims to enhance market opportunities, with negotiations covering various aspects such as Trade in Goods, Investment, Customs Procedure, and Intellectual Property Rights,” read a statement published on Saturday by the Sri Lankan president’s media department.

The island nation has been renewing a focus on trade deals to foster economic growth and help its battered economy, which is estimated by the World Bank to have contracted 3.8 percent last year after a severe foreign exchange crunch plunged it into a wider financial crisis.

A delegation headed by Thai Prime Minister Srettha Thavisin arrived in Colombo on Saturday to sign the FTA along with other agreements. Srettha will also attend Sri Lanka’s 76th Independence Day celebrations on Sunday.

The delegation headed by the Prime Minister of #Thailand Hon. Srettha Thavisin was ceremonially welcomed by President Ranil Wickremesinghe at the Presidential Secretariat.#DiplomacyLK @MFA_SriLanka @SLinBangkok #LKA #PMD pic.twitter.com/8d8gZLNqnz

— President’s Media Division of Sri Lanka – PMD (@PMDNewsGov) February 3, 2024

“This will provide tremendous business opportunities for both sides. We encourage our private sectors to explore the potentials of two-way trade and investment,” Srettha told a joint media briefing following the signing of the deal.

The two countries also signed a new air services agreement.

Bilateral trade between Sri Lanka and Thailand was worth about $460m in 2021, Sri Lankan central bank data showed.

Sri Lanka exports mainly tea and precious stones to Thailand and imports electronic equipment, food, rubber, plastics and pharmaceuticals.