Sri Lanka GDP grows 2.3-pct in 2019, fourth quarter 2.0-pct: Census Dept
ECONOMYNEXT – Sri Lanka’s gross domestic product grew 2.3 percent in 2019, down from 3.3 percent a year earlier, the statistics office said as the country started to stabilize after a currency collapse triggered by money printed to keep rates down in 2018.
Industry expanded 2.7 percent, up from 1.2 percent a year earlier.
Services grew 2.3 percent.
Agriculture grew at a slower 0.6 percent.
In the fourth quarter of 2019, Sri Lanka’s GDP grew 2.0 percent, the Department of Census and Statistics said.
Industry grew 1.4 percent, services grew 2.7 percent, but agriculture contracted 4.1 percent.
The data will be revised, the statistics office said.
Sri Lanka’s rupee collapsed from 161 to 182 to the US dollar in 2018 as large volumes of liquidity was injected to target an overnight call money rate, as well as liquidity injected by Soros-style swaps, triggering a collapse of the rupee just as the economy started to recover from a 2015/2015 currency collapse.
The corrective measures to restore monetary stability as well as the currency collapse itself killed domestic demand, worsens bad loans as a result of weak demand and pushes up interest rates.
Similar outcomes have been seen after the island’s soft-peg collapsed in 2000, 2008, 2013 and 2015. A currency collapse from money printing triggers an output shock and a spike in inflation, leading to a period of stagflation, analysts have said.
Analysts have called for reforms to the central bank and curbs on its domestic operations department to help maintain monetary stability and give an opportunity for the people to live in basic foundation for people to live and for companies to grow.
Sri Lanka’s monetary stability has against been undermined in March with several liquidity injections being made. The rupee has so far fallen from 182 to the US dollar to about 191.
Among South Asian central banks, Sri Lanka has the worst record with the rupee falling from 4.70 to the US dollar by independence to 191 so far. Maldives has the best at 15 with the currency now called the rufiyaa and the highest per capital income and freest trade. (Colombo/Apr02/2020)