Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

August 24, 2021

Activity seemingly faced headwinds in Q2, as available data suggests weaker economic dynamics: Both the manufacturing and services PMIs remained downbeat amid the fallout from fresh restrictions brought about by a third wave of Covid-19 infections. In addition, the tourism sector recorded a setback in May–June. The panorama seemed to improve at the outset of Q3. On 8 July, authorities reduced quarantine requirements for fully vaccinated foreign visitors, providing some respite for the struggling tourism industry, with tourist arrivals increasing during the month. Moreover, both PMIs soared in July, as services benefited from additional tourist demand and key manufacturing subsectors such as textiles registered higher new orders, production and employment. That said, the imposition of a 10-day lockdown on 20 August should severely disrupt activity ahead.

Sri Lanka Economic Growth

GDP should recover this year, particularly in H2, amid an improving tourism sector as the global vaccine rollout facilitates international travel. In addition, recovering demand from advanced economies should support exports. That said, lingering Covid-19 restrictions, the recent shipwreck’s possible impact on tourism and elevated external debt pose downside risks. FocusEconomics panelists project the economy to grow 4.8% in 2021, which is down 0.3 percentage points from last month’s forecast. In 2022, our panel sees the economy growing 4.2%.

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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