Sri Lanka expects to grow 5.8-pct in 2016; inflation 4.0-pct: central bank

ECONOMYNEXT – Sri Lanka’s gross domestic product will expand 5.8 percent in 2016, up from 4.8 percent in 2016, and the central bank is expecting to generate 4.0 percent average inflation.

In the 2015 annual report it forecasted a growth rate of 7.0 percent based. At the time Sri Lanka was calculating GDP on a different method and the 2014 growth was 7.4 percent.

In the 12-month to December 2015, the central bank generated 2.8 percent inflation (point to point), which is much lower rate that the double digit inflation it used to generate.

The central bank is also forecasting an annual average (inflation averaged across 24 months) inflation of 4.0 percent, which can indicated higher point-to-point inflation.

The central bank which has a monopoly on currency issue is the only agency that can control the amount of inflation generated in the country.

The central bank can also generate balance of payments trouble by printing money to keep interest rates down or by sterilizing foreign exchange sales.

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