- Expected to grow by 1.7% in 2024
- Inflation down to single digit after 19 months
- Foreign reserves would be further strengthened
Sri Lanka’s economy is showing stability and positive signs of recovery, said World Bank Economist Richard Walker in Colombo yesterday. Sri Lanka’s economy is expected to grow by 1.7% in 2024 after contracting by 3.8% in 2023.
He said inflation which was around 70% has come down to single digit levels after about 19 months. The interest rates too have come down. Foreign reserves too would be further strengthened with more tourism and remittances and also inflows from development partners.
“This has helped build usable official reserves. We’ve seen a substantial increase given the foreign exchange inflows; this has contributed to the balance of payments estimated in the first half of this year.”After depreciating by 81% against the US Dollar in 2022, the currency (LKR) appreciated by 11 percent from January to August of 2023.
“We also have seen a fall in the primary deficit, which declined in the first four months of the year. And this is really in line with the IMF programme,”he said. He said that there is now clarity on domestic debt restructuring as well. There is also an improved trade balance due to weaker import demand and import restrictions.
“At the same time, you see external trade has been subdued, I think largely because of the external global environment,”he said.
