Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

April 16, 2019

Growth fell to a 17-year low in 2018 as the constitutional crisis that erupted in October paralyzed the country, hammering investor sentiment and the tourism sector. The slowdown in Q4 was broad-based, with a particularly sharp contraction in fixed investment. Turning to Q1 2019, growth likely rebounded as the crisis waned: The rupee has recovered since January; international backers resumed lending to the government; and earnings from tourism grew at a healthy pace in the quarter. In other news, parliament passed the 2019 budget on 5 April, which sets an ambitious target of reducing the fiscal deficit to 4.4% of GDP, in line with its current IMF loan agreement.

Sri Lanka Economic Growth

Economic prospects are expected to improve this year. Renewed investor confidence should boost investment outlays, while robust tourism should strengthen service sector activity. Low foreign reserves, hefty debt servicing requirements and susceptibility to external shocks represent key downside risks to the outlook, however. Met the why particular panelists expect growth of 3.5% in 2019, which is down 0.3 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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