Saturday, 30 November 2019 09:46

Sri Lanka economic activity gains gradual revival

A gradual revival in domestic economic activity is expected over the medium term Economic growth is predicted to be modest during the remainder of the year, with likely subpart growth in Industry and Services activities as implied by leading indicators.

The economic growth of this year will be maintained at slightly less than 3 percent although the IMF and World Bank predicted it as 2.7 percent Central Bank Governor Dr. Indrajit Coomaraswamy told media conference in Colombo on Friday 29.

However, improved investor confidence, supported by political stability and fiscal stimulus driven boost to aggregate demand, is expected to drive short term growth.

The introduction of an appropriate policy mix, which utilises the available limited policy space prudently, would support the economy to reach as well as enhance its potential over the medium term.

External sector performance was buoyed by the cumulative contraction of the trade deficit over the first nine months of 2019, largely driven by the decline in import expenditure.

Tourist arrivals continued to show a gradual yet steady improvement after the Easter Sunday attacks.

The rupee denominated Government securities market experienced foreign inflows in recent weeks, but recorded a cumulative net outflow thus far during the year.

Although there were net outflows from the stock market, market indices responded positively to political developments in recent weeks.

The Sri Lankan rupee displayed increased volatility, following a notable appreciation against the US dollar in the immediate aftermath of the Presidential election.

Overall, the rupee has appreciated against the US dollar by 1.0 per cent thus far during the year. Gross official reserves are estimated at US dollars 7.8 billion at end October 2019, providing an import cover of 4.7 months

(LI)

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