Running out of petrol, medicines and foreign reserves, once-booming Sri Lanka is in a mess. And the measures needed to pull its economy out of the unparalleled crisis are likely to bring even more pain.

The dire assessment by new Prime Minister Ranil Wickremesinghe this week of the island nation's economic plight was a necessary first step, economists said. His proposed solution to bring back some stability includes selling the loss-making national airline, printing more money and possibly raising taxes as well as energy and...