In the late twentieth and early twenty-first century, tourism is one of the leading industries in the world economy, including a number of employees, participation in social products, national income, and total consumption. This study was conducted to examine the relationship between tourism and the economy of Sri Lanka by considering the structural changes of both sectors during the 1971-2020 period. Quantitative research Methodology has been applied with preliminary and secondary time series analysis. Annual Gross Domestic Product and Annual Official Tourist Receipts were modeled in the study. Dummy variables were included to present the structural changes in the estimated time series models. Annual time series data were examined by estimating the time series regression model. The backward step-wise regression estimations were applied to find the best model with Minimum Absolute Percentage Error value for forecasted values. The selected model among all estimated models was significant under all model adequacy statistical tests and that was sound enough to provide appropriateness of the tourism-led growth hypothesis to Sri Lanka. Sri Lanka is facing an economic crisis basically due to the excessive exchange rate for the US$ and the lack of Dollars in Sri Lankan reserve funds. It is possible to keep more attention on the tourism development of Sri Lanka as an immediate action to recover Sri Lanka from this rapid economic instability.
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