Sri Lanka’s economy shrank 2.3% in 2023

COLOMBO: Sri Lanka’s financial system shrank 2.3 per cent in 2023, legitimate knowledge confirmed on Friday (Mar 15), as the island nation struggled to gain away of its worst financial disaster in a protracted time.

However the financial system grew 4.5 per cent within the fourth quarter surroundings the stage for a recovery this 365 days, Sri Lanka’s Census and Statistics Department talked about in an announcement.

Sri Lanka’s agriculture sector grew 2.6 per cent from a 365 days earlier, nonetheless industrial output shrank by 9.2 per cent, while companies and products diminished by 0.2 per cent.

“Reveal benefited from a stronger currency, higher remittances and better tourism revenue within the second half of 2023, which fuelled sure economic sentiment,” the assertion added.

Sri Lanka’s financial system contracted 7.8 per cent in 2022 as a extreme faraway places commerce disaster coupled with political instability devalued its currency and sent inflation and pastime charges soaring.

Helped by a US$2.9 billion Global Monetary Fund bailout secured ideal March, Sri Lanka’s financial system began a painful route in direction of recovery and is anticipated to grow 1.8 per cent this 365 days.

“We ask recovery to be stronger within the second half of the 365 days pushed by sectors equivalent to tourism and financial companies and products,” talked about Dimantha Mathew, head of research at First Capital.

“Decrease pastime charges and moderating inflation will furthermore give of us more disposable income and give a boost to consumption.”

However hard reforms furthermore lie ahead, equivalent to higher taxes, reforms of loss-making express enterprises and a restructuring of Sri Lanka’s faraway places debt.

An IMF delegation is in Colombo for the second review of the programme.

Some analysts ask the Central Bank of Sri Lanka (CBSL) to minimize pastime charges later this month, persevering with its coverage easing having slashed pastime charges by 650 basis factors since June to spice up boost, with inflation having fallen to 5.9 per cent in February from a high of 70 per cent ideal September.