But the island has been scarred by a long and bitter civil war arising out of ethnic tensions between the majority Sinhalese and the Tamil minority in the northeast.
After more than 25 years of violence, the conflict appeared to be at an end - at least militarily - in May 2009, when government forces seized the last area controlled by Tamil Tiger rebels.
Known as "Serendip" to Arab geographers, the island fell under Portuguese and Dutch influence and finally came under British rule when it was called Ceylon.
But the majority Buddhist Sinhalese community resented what they saw as favouritism towards the mainly-Hindu Tamils under British administration.
The growth of a more assertive Sinhala nationalism after independence fanned the flames of ethnic division until civil war erupted in the 1980s between Tamils pressing for self-rule and the government.
The violence killed more than 70,000 people, damaged the economy and harmed tourism in one of South Asia's potentially prosperous societies.
International concern was raised about the fate of civilians caught up in the conflict zone during the final stages of the war, the confinement of some 250 000 Tamil refugees to camps for months after the war, and allegations that the government had ordered the execution of captured or surrendering rebels.
A UN report published in 2011 said both sides in the conflict committed war crimes against civilians. The Sri Lankan government rejected the report, describing it as biased.
Facts
* Full name: Democratic Socialist Republic of Sri Lanka
* Population: 20.4 million (UN, 2010)
* Capital: Colombo (commercial), Sri Jayawardenepura (administrative)
* Largest city: Colombo
* Area: 65,610 sq km (25,332 sq miles)
* Major languages: Sinhala, Tamil, English
* Major religions: Buddhism, Hinduism, Islam, Christianity
* Life expectancy: 72 years (men), 78 years (women) (UN)
* Monetary unit: Sri Lankan rupee
* Main exports: Clothing and textiles, tea, gems, rubber, coconuts
* GNI per capita: US $2,240 (World Bank, 2010)
* Internet domain: .lk
* International dialling code: +94
Leaders
Mahinda Rajapaksa won a landslide victory in January 2010 in early elections which he called after he declared victory in a 25-year war with the Tamil Tiger separatists.
Former army chief General Sarath Fonseka, who led the final campaign that crushed the Tamil Tigers, lost against Mr Rajapaksa and said he would contest the result. Soon after, Gen Fonseka was put on trial on charges of engaging in politics before leaving the army, and convicted several months later.
The president's mastery of the political landscape was further consolidated when his ruling coalition won an overwhelming majority in parliamentary elections in April 2010. Later in the year, MPs passed a constitutional amendment allowing him to stand for unlimited terms in office.
Dictatorial tendencies?
The opposition accuses the president of moving the country towards dictatorship, but Mr Rajapaksa says he is guaranteeing Sri Lanka much-needed stability.
Defeat of the rebels came in mid-2009. Mr Rajapaksa, seeking to capitalise on his success at ending the war, called early elections to get a fresh mandate to revive the economy and implement a political solution for ethnic minorities.
A Buddhist lawyer from the Sinhalese ethnic majority, Mr Rajapaksa draws the core of his support from rural Sinhalese voters whose rights he championed as labour minister in the 1990s.
Mr Rajapaksa became prime minister in 2004, and was praised for his handling of the aftermath of the tsunami of the year.
But he has faced criticism for events at the end of the Tamil Tiger war, during which thousands of civilians were killed as troops battled to corner and crush the rebels.
He also promised to protect journalists and freedom of speech, but at least one prominent journalist was murdered and dozens have been beaten, arrested or forced to flee the country during his time in office.
In 2011, Mr Rajapaksa's government scrapped emergency laws in place for much of the past four decades. However, it sparked international outcry by introducing new laws restoring many of the controversial powers granted the authorities under the state of emergency.
From : BBC News
