Sunday, June 9, 2024
Local NewsSri Lanka Economy

Sri Lanka’s economy contracted by 7.8% -Word Bank publishes Sri Lanka Development Update 2023


Sri Lanka’s economy contracted by 7.8 percent in 2022. While all key sectors contracted, manufacturing and construction sectors suffered the most amid shortages of inputs and supply chain disruptions. High frequency indicators, such as purchasing managers’ indices, indicate continued stress in the first quarter of 2023.

After peaking at an unprecedented 69.8 percent in September, headline inflation closed at 57.2 percent in 2022, reflecting the impact of elevated global commodity prices, monetization of fiscal deficits, currency depreciation, and food supply constraints due to the 2021 ban on chemical fertilizers. Since January 2022, the central bank has raised policy rates by a cumulative 1,050 basis points to try curbing inflation.

Due to the economic contraction, half a million jobs were lost in industry and services and back-up lower-paying agricultural jobs could not compensate for income losses. Combined with increases in the cost of living, this economic contraction led national and urban poverty to double (to 25 percent) and triple (to 15 percent), respectively. The crisis left 52 percent of the population in estate areas living in poverty……….|read more

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