Sri Lanka Economic Forecast

Sri Lanka Economic Outlook

August 20, 2019

The economic growth was likely dejected in the second quarter, mainly due to a freefall in tourist arrivals following the Easter bombings. Moreover, industrial production growth averaged much lower in Q2 relative to the first quarter, as did the manufacturing and services PMI readings. That said, the economy appeared to get back on its feet towards the end of the quarter, with the services PMI returning to expansionary territory in June and the manufacturing PMI picking up in the same month. Turning to Q3, government measures to bolster the tourism sector—coupled with looser monetary policy and an extension of the IMF program—should be shoring up activity. Indeed, the fall in tourist arrivals, while still sharp, moderated in July.

Sri Lanka Economic Growth

Economic growth will likely soften this year as April’s terrorist attack hampers tourism and business confidence. A weaker regional growth outlook, security concerns and high public debt pose downside risks to the outlook. That said, increased government spending and the looser monetary stance should support the economy. FocusEconomics panelists expect growth of 2.8% in 2019, which is down 0.1 percentage points from last month’s forecast, and 3.5% in 2020.

Sri Lanka Economy Data

20132014201520162017
Population (million)20.620.821.021.221.4
GDP per capita (USD)3,6083,8203,8393,8714,102
GDP (USD bn)74.379.380.582.188.0
Economic Growth (GDP, annual variation in %)3.45.05.04.53.4
Consumption (annual variation in %)7.03.97.86.91.8
Investment (annual variation in %)-8.811.53.85.08.2
Industrial Production (annual variation in %)-0.56.19.2-2.82.5
Unemployment Rate4.44.34.74.44.2
Fiscal Balance (% of GDP)-5.2-6.2-7.0-5.4-5.5
Public Debt (% of GDP)71.872.278.579.679.1
Money (annual variation in %)18.013.117.218.917.5
Inflation Rate (CPI, annual variation in %, eop)4.71.34.64.57.2
Inflation Rate (CPI, annual variation in %)7.02.82.24.06.6
Policy Interest Rate (%)8.508.507.508.508.75
Exchange Rate (vs USD)171.6173.5151.0161.8172.4
Exchange Rate (vs USD, aop)129.1130.6136.1146.2152.5
Current Account (% of GDP)-3.4-2.5-2.3-2.1-2.6
Current Account Balance (USD bn)-2.5-2.0-1.9-1.7-2.3
Trade Balance (USD billion)-7.6-8.3-8.4-8.9-9.6
Exports (USD billion)10.411.110.610.311.4
Imports (USD billion)18.019.418.919.221.0
Exports (annual variation in %)6.37.1-5.2-2.310.2
Imports (annual variation in %)-6.27.9-2.51.39.4
International Reserves (USD)7.58.27.36.08.0
External Debt (% of GDP)53.754.155.756.658.7

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Sri Lanka Facts

ValueChangeDate
Exchange Rate180.60.02 %Sep 04

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