Sri Lanka ’s economic growth is likely to be further affected by the Easter Sunday attacks although it is premature to conduct a comprehensive revision to the Medium Term Macroeconomic Framework, Central Bank Governor Indrajit Coomaraswamy said.
Accordingly, real GDP growth will be lower than projected; he disclosed adding that Sri Lankan rupee has recorded a cumulative appreciation of 3.6% against the US dollar so far during the year.
Addressing a media conference in Colombo on Friday 31, he noted that Gross official reserves are estimated at USD 7.2 bn at end Apr 2019 (4.1 months import cover) and tourist arrivals and earnings will also be lower than projected.
The negative spillover effects could be felt on related sub sectors such as hotels and restaurants, transportation, entertainment and hospitality, food and beverages, trading and financial services
Current account deficit could be higher than projected, although performance in Q1, 2019 indicated a lower than expected trade deficit
Fiscal deficit could be higher than projected, although expenditure switching could dampen the effect on the budget 2019, he said.
It is expected that earnings from tourism would rebound with improved security conditions, relaxation of travel advisories, promotional campaigns and recently introduced policy measures to revive the sector, Dr. Coomaraswamy claimed.
Inflation is likely to remain in the desired 4-6% range in 2019 and beyond, supported by appropriate policy measures.
In March 2019, trade deficit contracted to US$ 592 mn from $ 871 mn in March 2018 while trade deficit for the first quarter of 2019 also narrowed to $1,661 mn from $ 2,982 mn during the corresponding period of 2018
Sharp contraction in the trade deficit was due to the high growth in exports and a significant decline in imports, particularly imports of motor vehicles, he added.
Tourist earnings declined while workers’ remittances increased marginally in April 2019 Tourist arrivals in April 2019: also decreased by 7.5% (y-o-y) to 166,975 from 2,333,796 in 2018
Earnings in April 2019: has dropped to US$ 313.4 mn from $ 4,381 mn in 2018 ,while workers’ remittances in April 2019 increased by 2.3% (y-o-y) to $ 553.7 mn (USD 7,015 mn in 2018)
(LI)