The Sri Lanka government expects a US$1.5 billion hit to tourism this year as a result of the Easter bomb attacks which killed hundreds.
"Tourism will be the worst affected," finance minister Mangala Samaraweera said in a media briefing, with an estimated 30% decline in tourist arrivals.
Samaraweera said Sri Lanka could take up to two years to fully recover, as luxury hotels were specifically targeted.
"Typically, countries that suffer isolated ISIS-style attacks see tourism recovering within one-to-two years, as long as root causes are addressed and security measures taken are well communicated," the minister said.
He cited Belgium, France and Spain as countries which managed to recover quickly from terror attacks but Sri Lanka will likely find it tougher to restore confidence.
Tourism had been on the up, with a near 5% increase in arrivals last year to more than 740,000 visitors.
The country just suspended a plan to offer visa-free entry for nationals of 39 countries to boost low-season arrivals.
Samaraweera said a range of concessions will be rolled out to help tourism operators cope with the inevitable downturn in business.
