ECONOMYNEXT – Sri Lanka’s inflation will increase this year and the next although the economy’s stability in the short term has improved with recent policy corrections, the World Bank said.
Its latest Sri Lanka Development Update – a half-yearly report on the Sri Lankan economy and its prospects – said Sri Lanka’s GDP growth will remain unchanged in 2016 and grow marginally over 5.0 percent in 2017.
Growth will be driven by public and private investment, including the resumption of postponed Foreign Direct Investment, tourism and reduced negative impact on growth from commodity imports.
“The impact of past currency depreciation and the increase in the VAT (value added tax) rate will increase inflation in 2016 and 2017 despite downward pressure from low international commodity prices,” the World Bank said.
The current account deficit is projected to narrow in 2016 with reduced imports and increased tourism. The fiscal deficit is projected at 5.7 percent of GDP for 2016.
(COLOMBO, Oct 28, 2016)