Sri Lanka’s economy to shrink by 2% in 2023, central bank says


New Delhi (Reuters) – Sri Lanka’s economy is expected to shrink by 2% in 2023, its central bank said in an annual report on Thursday, as the country struggled to emerge from its worst financial crisis in decades.

The central bank projected Sri Lanka’s economy would grow by 3.3% in 2024, according to the report.

The economy shrank by 7.8% in 2022, in a year dominated by deep political instability, soaring inflation and steep currency depreciation as Sri Lanka struggled with a financial crisis triggered by record low foreign exchange reserves.

The central bank’s growth estimate for 2023 is more optimistic than the 3.1% contraction projected by the International Monetary Fund (IMF), which finalised a nearly $3-billion bailout to the crisis-hit country last month. The World Bank estimates Sri Lanka’s economy will contract by 4.3% in 2023.

“Sri Lanka’s economy has been gradually stabilising since mid-2022. The long fuel lines, severe shortages, and high inflation have gradually reversed,” said Udeeshan Jonas chief strategist at CAL Group.

“Recovery from sectors such as tourism could be better than expected and consumer demand is also picking up. That together with the low base could see better performance.”

Sri Lanka, which defaulted on its foreign debt a year ago, is currently negotiating its debt repayments with bondholders and bilateral creditors. The island expects to complete its debt restructuring process in time for the first IMF review in September.

(This story has been corrected to add the word ‘contraction’ in the IMF estimate and change year to 2023, not 2024, in paragraph 4)

Share post:



Indian Prime Minister Modi to attend COP28 in Dubai

New Delhi (Reuters) - Indian Prime Minister Narendra Modi...

Vermont man charged with attempted murder in shooting of students of Palestinian descent

(Reuters) - The man accused of shooting and wounding...

Backing Israel, Elon Musk sees need to stop murderous propaganda

Jerusalem (Reuters) - Tech entrepreneur Elon Musk lent support...

Indian rescuers say very close to reaching 41 men trapped in tunnel

Silkyara (Reuters) - Rescuers in India are just six...