Sri Lanka’s economy may contract as much as 6.7 percent in 2020, the World Bank has said as a Coronavirus crisis hit exports, domestic demand and the external sector has also weakened under monetary stimulus.
Most of Lanka’s economic activities have been brought to a standstill from March as the crisis first hit tourism, exports through supply chain disruptions and curfews brought all domestic economic activities to a standstill since March This year.
Sri Lanka’s GDP is projected to decline by 6.7% this year, with the COVID- 19 crisis affecting all key drivers of demand: exports private consumption, and investment, the World Bank said in its latest report titled ‘South Asia Economic Focus’
“The COVID-19 crisis has substantially clouded the outlook and exacerbated an already challenging macroeconomic situation. The economy is expected to contract by 6.7% in 2020, with all key drivers of demand affected: exports, private consumption and investment,” the report stated.
Meanwhile, the World Bank forecasts Sri Lanka’s fiscal deficit to widen sharply to 11.1% this year, from 6.8% in 2019, the debt-to-GDP ratio to exceed 100% from 86.8% in 2019.
The World Bank also expects Sri Lanka’s debt-to-GDP levels to remain elevated over 100% levels in 2021 and 2022 also.
(LIN)