Sri Lanka’s economic growth to ‘strongly rebound’ in 2021 says Central Bank Governor
Sri Lanka’s economic growth is expected to ‘strongly rebound’ in 2021 with a growth of around 5%- 6%, Governor of the Central Bank of Sri Lanka, Prof. W.D. Lakshman has reportedly said.
“The Government and the Central Bank are also continuing discussions with bilateral and multilateral partners, internationally and locally, and we are confident the Sri Lankan economy will continue to display its resilience despite unfounded sovereign rating downgrades that the country experienced in 2020. Reflecting the pandemic driven contraction in 2020 we expect the Sri Lankan economy to ‘strongly rebound’ in 2021 with a growth of around 5%- 6%,” Prof. Lakshman has said during the first Monetary Policy review online press conference for the year 2021.
“The turnaround in Sri Lanka sovereign bond yields as well as the notable upturn in the stock market indices displays the confidence that the global and domestic investors have placed on the Sri Lankan economy and its prospects. We expect the Sri Lankan economy, particularly the production side, to respond favourably to the fiscal and monetary stimuli in place and also to the novel working environments created by the pandemic. The improvements on the domestic front will help the country to stand on its own and also address the stability concerns that have been highlighted from time to time in a substantial manner,” the Governor has added.
Prof. Lakshman has further said that the Monetary Board considers the current monetary policy environment to be appropriate.
“Lending rates have declined sharply in 2020 and we expect a further reduction in market lending rates with the high level of excess liquidity that is being maintained in the domestic money market. We have seen an acceleration in private sector credit growth in response to the improving business environment and low interest rates.”
“The external sector of the economy has recorded notable developments during the year. Workers’ remittances have surpassed the US$ 7 billion exceeding expectations. In spite of meeting the government’s foreign debt service obligations of US$ 4.5 billion, official reserves have been maintained at US$ 5.7 billion by the end of 2020,” Prof. Lakshman has said.
“With the COVID pandemic tourism inflows and financial inflows were severely affected during the period of 2020 and we expect these inflows to recover with effect from 2021,” he has added.
OSL take:
The statement by the Governor of the Central Bank of Sri Lanka is a further confidence booster for foreign businesses/investors to engage and explore opportunities in Sri Lanka. The island is on track to becoming a business hub in the South Asian region given its geographical positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed by the country. Sri Lanka’s economic activities during the global Covid 19 pandemic are showing signs of the country’s economy recording a quick rebound. Foreign businesses/investors could confidently explore business/investment opportunities in Sri Lanka.
| Article Code : | VBS/AT/20210121/Z_8 |