Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

May 21, 2019

Economic growth likely rebounded in Q1 from the 17-year low registered in Q4 2018, as the constitutional crisis subsided and international lenders resumed relations with the country. Tourism notably recovered, posting healthy visitor and earnings growth, while industrial production picked up, primarily due to strong growth in March. However, terrorist attacks on 21 April, which killed over 250 people, will have dealt a decisive blow to the nascent economic recovery. Since then, officials reported tourist arrivals have more than halved, while the manufacturing PMI hit an all-time low in April. Moreover, lower business confidence is poised to weigh on investment in the coming months, while a damaged tourism sector could deprive the country of critical foreign reserves inflows.

Sri Lanka Economic Growth

Recent terrorist attacks severely affect prospects for this year. Growth will likely remain feeble due to an inevitably weakened tourism sector, which could also hurt the government’s finances in turn. Moreover, critically-low foreign reserves and large debt repayments due this year could prove destabilizing and force the authorities to seek additional foreign financing. Met the why particular panelists expect growth of 3.4% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.8% in 2020.

Sri Lanka Economy Data

20132014201520162017
Population (million)20.620.821.021.221.4
GDP per capita (USD)3,6093,8203,8393,8424,063
GDP (USD bn)74.379.380.581.587.1
Economic Growth (GDP, annual variation in %)3.45.05.04.53.1
Consumption (annual variation in %)7.03.97.8-3.30.6
Investment (annual variation in %)-8.811.53.827.117.2
Industrial Production (annual variation in %)-0.56.19.2-2.84.3
Unemployment Rate4.44.34.74.44.2
Fiscal Balance (% of GDP)-5.2-6.2-7.0-5.4-5.5
Public Debt (% of GDP)71.872.278.579.679.4
Money (annual variation in %)18.013.117.218.917.5
Inflation Rate (CPI, annual variation in %, eop)4.71.34.64.57.2
Inflation Rate (CPI, annual variation in %)7.02.82.24.06.6
Policy Interest Rate (%)8.508.507.508.508.75
Exchange Rate (vs USD)171.6173.5151.0161.8172.4
Exchange Rate (vs USD, aop)129.1130.6136.1146.2152.5
Current Account (% of GDP)-3.4-2.5-2.3-2.1-2.7
Current Account Balance (USD bn)-2.5-2.0-1.9-1.7-2.3
Trade Balance (USD billion)-7.6-8.3-8.4-8.9-9.6
Exports (USD billion)11.411.111.611.311.4
Imports (USD billion)18.019.418.919.221.0
Exports (annual variation in %)6.37.1-5.2-2.311.2
Imports (annual variation in %)-6.27.9-2.51.39.4
International Reserves (USD)7.58.27.36.08.0
External Debt (% of GDP)53.754.155.757.059.5

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Sri Lanka Facts

ValueChangeDate
Exchange Rate176.70.02 %May 13

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