ECONOMYNEXT – Sri Lanka’s gross domestic product could grow between 3.0 to 3.5 percent in the first quarter of 2021, Central Bank’s Director of Economic Research Chandranath Amarasekara said.
Sri Lanka’s economic activities are rapidly normalizing from the Second Wave of Coronavirus.
The ongoing vaccination campaign is also giving people confidence.
Sri Lanka has vaccinated frontline staff and is now focusing on over 35 population in the Western Province is which the most economically active and is also the highest risk area.
In 2021 Sri Lanka’s economic growth is expected to recover to between 5.5 to 6.0 percent, Amarasekara said.
Sri Lanka’s economy is expected to have contracted 3.9 percent in 2020, largely due to a steep fall in the second quarter. The third quarter showed a recovery of 1.5 percent when the Coronavirus second wave hit.
Tourists have also started to trickle in after the airports were opened and is expected to gradually pick up.
Sri Lanka’s private credit has picked up in the final quarter of 2021 but slowed in January.
In January private credit usually slows or contracts after a spurt in December.
In December banks go after customers offering cheap short term loans in a bid to grow the loan book, which also tends to moderate bad loans, analysts who study the sector closely say. Bad loan numbers also spike in the first quarter.
However concerns have been raised about the excess liquidity and external stability and monetary instability.
In the past attempts to target an output gap with liquidity injections and ended in currency trouble and negative output shocks. (Colombo/Mar05/2021)