Sri Lanka Central Bank’s recent actions towards fiscal tightening would constrain consumer spending and public investment
especially in an environment of higher domestic interest rates, UN-ESCAP survey 2017 divulged.
UN –ESCAP’ has released economic and social survey of Asia and the Pacific 2017 specifically highlighting Sri Lanka’s economic growth under its country specific findings.
In Sri Lanka, the survey reports that economic growth moderated to 4.4 percent in 2016, from 4.8 percent in 2015 and an average of 7.4 percent during the period 2010-2014.
The report also shows that economic growth is expected to rebound modestly to 4.8 -4.9 percent in 2017-2018. Agriculture activity should recover from adverse weather conditions, the report stressed.
Prodction of key commodities, such as rubber, rice and tea was impaired by severe weather conditions . for production of food and beverages and textiles and garments .slight declines were recorded , the survey report said.
Agriculture-related activities contracted 4.2 percent in 2016, impacted by supply-side disruptions on account of floods in the second quarter and drought conditions during the final quarter of 2016.
Central Bank Governor Dr. Indrajit Coomaraswamy said rainfall was expected to be back to normal by end May, and that agriculture was expected to do better.
However the construction and services sectors were more buoyant, especially in financial services and domestic trade.
On the external front, export earnings shrank in 2016, although the current account deficits narrowed due to stronger tourism revenues and remittance inflows. .
The country’s medium term economic development is contingent upon the success of reforms designed to reduce stubbornly large fiscal and trade deficits (LIN)