Wednesday, January 8, 2020

Lanka economy on healing path-ICRA Lanka

Hit by successive blows from 2018 political crisis and Easter Attacks, Sri Lanka’s GDP growth in 2019 (2.7% according to IMF and ADB) is expected to be the lowest since 2001.

In 3Q the economy saw signs of recovery with industry and service sectors gathering impetus but the growth are expected to be less than 3% in 4Q.

Following the Presidential Election, the economic activities revived briefly driven by the positive sentiments. However, performance of the agriculture sector continued to remain muted owing to adverse weather conditions. Export sector did not experience appreciable improvement over the months in comparison to 2018 but imports shrunk notably causing trade gap to narrow.

The Central Bank of Sri Lanka (CBSL) made significant intervention to bring the interest rates down. As a result, there is marked drop in short-term and long-term interest rates.

Yield curve showed a significant downward shift from the year beginning. Liquidity shortage that prevailed in the beginning of the year led to a private credit crunch.

 

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