Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

December 16, 2021

Activity was in seemingly good shape in Q3 as looser Covid-19 restrictions from early July boosted momentum, with both PMIs clocking expansions in the quarter. Moreover, tourism picked up significantly in Q3, particularly from the start of September. Turning to Q4, conditions should be improving further as some restrictions were lifted at the start of the period, while tourism gained significant steam in October–November, with the number of visitors surging in both months. Meanwhile, both PMIs jumped to seven-month highs in October, boding well for the economy in the final quarter of the year. In other news, on 12 December the president suspended parliament for an additional week until 18 January, delaying a discussion around applying for a bailout package from the IMF amid an imminent foreign currency crisis, as international reserves reach dangerously low levels.

Sri Lanka Economic Growth

The economy should continue to expand at a brisk pace in 2022, amid reviving tourism and an improved health situation as the inoculation campaign gains traction. That said, considerable debt repayments maturing next year and ever thinner international reserves pose a major threat to macroeconomic stability, with reserves below two months’ worth of imports as of October. FocusEconomics panelists project the economy to grow 4.2% in 2022, which is up 0.1 percentage points from last month’s forecast. In 2023, our panel sees the economy growing 4.0%.

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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