Sri Lanka’s economic growth will exceed 4 per cent this year due to notable improvement in business confidence caused by political stability and targeted measures taken by authorities to boost demand, Central Bank (CB) Governor Prof. W.D. Lakshman disclosed at a media conference in Colombo recently
“Revival in economic activity and confidence, fiscal measures, credit relief package and declining interest rates will help sustain the acceleration of credit growth over time,” he predicted.
“There has been notable improvement in the current account, despite disruptions faced in 2019,” he said adding that the exchange rate has remained stable in 2019 and it will remain the same in 2020.
He noted that the Monetary Board, which met on Wednesday, focused on maintaining an accommodative policy stance, reducing interest rates in the process.
This was in line with many developed and emerging markets around the world that were also concerned with a global growth slowdown that has been predicted by the International Monetary Fund and others for 2020.
External sector conditions will be monitored closely and managed with appropriate macro-prudential measures, fiscal and monetary measures, he assured.
The country’s inflation continues to remain in the range of 4 to 6 per cent achieving the target with gradually improving domestic supply conditions while core inflation has decelerated.
“The exchange rate has remained stable, and external sector conditions will be monitored closely and managed with appropriate macro-prudential measures, fiscal and monetary measures,” Prof. Lakshman said.
He expressed concern on the present rising inflation which rose to 6.2 per cent in December 2019 which was a temporary situation due to disrupted supply and elevated demand due to the festive season.
This has not resulted in any overheating in the economy, he said pointing out that reducing policy rates would not drive up inflation to unmanageable levels.
(FT)