ECONOMYNEXT – Sri Lanka’s economy will shrink 3.0 percent in 2023, and will grow 1.4 percent in 2024, Manila-based Asian Development Bank said in an outlook for Asian economies.
“Export growth is likely to remain weak in 2023 as global growth slows, high inflation erodes Sri Lankan competitiveness, and skilled workers emigrate,…” the report said.
Sri Lanka’s agriculture and tourism sector is beginning to recover, Utsav Kumar, Deputy Country Director, told a forum in Colombo.
“The outlook is clouded by uncertainty concerning progress on debt restructuring, the timely implementation of measures under the IMF program, political developments as the country enters the electoral cycle that will likely test the authorities’ will to carry out reform, and unpredictable weather patterns,” the report said.
“Risks to the outlook could also emanate from the financial sector which has a significant sovereign exposure and faces deteriorating credit quality.
“Other downside risks are a global slowdown that exceeds expectations, which would hit foreign exchange earnings; political instability, which could hit tourism or delay reform; and a possible resurgence of the pandemic.”
The International Monetary Fund has also projected a 3.0 percent contraction in 2023 and a 1.5 percent positive growth in 2024.
Sri Lanka’s own officials are more optimistic, given past trend.
Other analysts say it the central bank continues to deny monetary stability to the poor and economic agents by operating contradictory money and exchange rate policies, or output gap targeting as it has done in the past, growth will be low. (Colombo/Apr04/2023)