Sri Lanka’s economy expands for a second straight quarter

Posted by Editor on March 16, 2024 – 7:36 pm

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Sri Lanka’s economic system expanded for a second straight quarter as industrial exercise picked up tempo, buoyed by an Worldwide Financial Fund bailout and decrease rates of interest.

Gross home product rose 4.5% within the three months to December from a yr in the past, the Statistics Division stated Friday. That’s larger than the median forecast of three.7% progress in a Bloomberg survey of economists, and compares with a print of 1.6% within the July-September interval. For the yr, the economic system clocked a contraction of two.3%.

The enlargement comes because the South Asian nation seeks to win an preliminary approval for the subsequent tranche of a $3 billion IMF mortgage program. Authorities are aiming to finish restructuring the nation’s debt by June, a key situation to maintain funds from the bailout flowing. Negotiations with greenback bondholders over the phrases of recast are underway.

Industrial manufacturing expanded 7.9% from a yr in the past, whereas providers sector rose 2.8%, the info confirmed.

Decrease borrowing prices aided the nation’s restoration. Sri Lanka’s central financial institution decreased its benchmark charges by a complete of 650 foundation factors in 2023. The financial authority held charges for the primary time in 5 months in January as inflation began to choose up with the economic system’s rebound. Whereas worth features are anticipated to peak within the coming months, the central financial institution sees no menace to its 5% goal.

Elevated inflows from tourism and remittances have additionally helped Sri Lanka’s turnaround. The nation’s leisure sector is seeing a revival to pre-Covid ranges, with earnings from customer arrivals posting the very best worth in 4 years in January. Its native rupee is on the strongest degree since June, gaining 6% towards the greenback this yr.

(Supply: Bloomberg)