CB sticks to 5% GDP growth estimate for 2021, whilst IMF, WB and ADB forecast ranges from a low of 3.3% and a high of 3.6%
The Central Bank of Sri Lanka (CBSL) yesterday disagreed with the IMF and other multilateral agencies' forecast on Sri Lanka’s GDP for this year though it believes in their global growth projection.
The IMF, in its World Economic Outlook update this week, downgraded Sri Lanka’s 2021 growth to 3.6% down from earlier projection of 4%.
However, the CBSL yesterday stuck to its GDP forecast of around 5% growth for this year on the basis that its team has the best information and insights on the domestic front and not the multilateral agencies. Despite the disagreement, CBSL said it goes with the IMF's forecast on global growth for 2021. It revised global GDP growth down marginally to 5.9% from 6% earlier and kept 2022 growth unchanged at 4.9%.
“We go with the IMF’s global projections which they are best suited for, but Sri Lanka, like many other countries, differ on its forecast for individual nations,” Central Bank Governor Nivard Cabraal told the media following the October monetary policy review.
The World Bank (WB) projection for Sri Lanka's 2021 growth is 3.3%, whilst that of the Asian Development Bank (ADB) is 3.4%, down from the 4.1% forecasted earlier.
CBSL forecast a 5% growth in 2021 is on the back of 8% growth in the first half on the back of contraction of the economy in the COVID-impacted corresponding period of last year. It said the Sri Lankan economy is making headway, despite the pandemic-related disruptions.
“With the gradual return to normalcy after phasing out the COVID-19-related lockdown measures, alongside the successful rolling out of the COVID-19 vaccination program and growth-supportive policy measures, the momentum of economic activity is expected to sustain in the period ahead,” CBSL added.
It said the Sri Lankan economy witnessed a strong recovery during the second quarter of 2021, recording a real growth of 12.3% year-on-year (YOY), following the growth of 4.3% YOY in the first quarter of 2021.
“Available indicators and projections suggest that the real economy would grow by around 5% in 2021, and gradually traverse to a high and sustained growth trajectory over the medium-term, following near-term stabilisation measures that are being put in place by the Government and the Central Bank,” CBSL added.
(FT)