Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

July 21, 2020

In the second quarter Covid-19 and associated containment measures continued to weigh on economic activity at home as well as on trade and tourism, following a frail first quarter. No tourists arrived on the island in Q2 as passenger flights and ship arrivals were cancelled—consequently, foreign visits were down by almost half in year-to-date terms compared to last year. Moreover, industrial production dropped by over a quarter year-on-year in May, although the data indicated that the economy passed the worst of the crisis. The private sector, more generally, remained in contractionary territory, with operating conditions in both the manufacturing and services sectors deteriorating in the quarter, despite returning to expansionary territory in June. Meanwhile, the government lifted the nationwide lockdown in late June and this should boost domestic activity, although intentional borders remain closed.

Sri Lanka Economic Growth

This year, the economy is expected to contract on the back of the fallout from Covid-19, which dealt a heavy blow to the tourism sector as well as domestic demand. Household consumption and fixed investment will particularly suffer from containment measures and general uncertainty. FocusEconomics panelists project the economy to contract 2.5% in 2020, which is down 0.9 percentage points from last month’s forecast. In 2021, our panel sees the economy growing 3.6%.

Sri Lanka Economy Data

2015 2016 2017 2018 2019
Population (million)21.021.221.421.721.9
GDP per capita (USD)3,8393,8714,0754,0743,831
GDP (USD bn)80.582.187.488.384.0
Economic Growth (GDP, annual variation in %)5.04.53.63.32.3
Consumption (annual variation in %)7.86.92.72.93.5
Investment (annual variation in %)3.85.08.26.6-9.5
Industrial Production (annual variation in %)2.25.74.71.22.7
Unemployment Rate4.74.44.24.4-  
Fiscal Balance (% of GDP)-7.6-5.3-5.5-5.3-6.8
Public Debt (% of GDP)77.779.077.983.786.8
Money (annual variation in %)17.218.917.513.57.6
Inflation Rate (CPI, annual variation in %, eop)4.64.57.22.84.8
Inflation Rate (CPI, annual variation in %)2.24.06.64.34.3
Policy Interest Rate (%)7.508.508.759.008.00
Exchange Rate (vs USD)151.0161.8172.4191.8200.1
Exchange Rate (vs USD, aop)136.1146.2152.5162.6178.7
Current Account (% of GDP)-2.3-2.1-2.6-3.2-2.2
Current Account Balance (USD bn)-1.9-1.7-2.3-2.8-1.8
Trade Balance (USD billion)-8.4-8.9-9.6-10.3-8.0
Exports (USD billion)10.610.311.411.911.9
Imports (USD billion)18.919.221.022.219.9
Exports (annual variation in %)-5.2-2.310.24.70.4
Imports (annual variation in %)-2.51.39.46.0-10.3
International Reserves (USD)7.36.08.06.97.6
External Debt (% of GDP)55.756.659.159.266.6

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Sri Lanka Facts

Value Change Date
Exchange Rate181.20.02 %Jan 01

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