Sri Lanka’s economy to see a pickup in fourth quarter of 2020
The Governor of the Central Bank of Sri Lanka (CBSL), Prof. W. D. Lakshman has reportedly said that Sri Lankan economy which contracted by 1.6% in the first quarter of 2020 due to the adverse impact of Covid-19, will stabilize in the third quarter and expected to rebound in the fourth quarter.
As per the available indicators, on economic activity during the second quarter of 2020 is likely to be substantial.
“It is essential for the country to record a positive growth rate during this year and a rebound of economic activity is expected in the fourth quarter,” the Governor has been quoted as saying in the local media.
“This will be supported by improved political stability which is a key for economic growth and to build investor business confidence.”
According to local media reports, the enhanced focus on domestic production for import substitution as well as to export is expected to drive near term growth, with potentially significant implications on the longer horizon.
According to the CBSL Governor, during the past six months there were many positives and a few negatives and the external sector has continued to demonstrate resilience, reflecting the impact of prudent measures implemented amidst the Covid-19 outbreak.
“The trade deficit has narrowed during the first half of 2020, as the contraction of imports outpaced the contraction of exports, supported by import restrictions and subdued global petroleum prices. Some improvement in workers’ remittances was observed in June, in contrast to the declining trend observed since March 2020. Depreciation of the Sri Lankan rupee against the US dollar has been limited to 1.3 per cent thus far during the year, following a significant depreciation recorded during March-April 2020,” it has been further stated.
OSL take:
The words of the Governor of the Central Bank of Sri Lanka are encouraging towards foreign businesses/investors exploring opportunities in the country. Sri Lanka throughout history has shown it could withstand any external pressure as well as economic resilience. The country’s exports sector has already shown an impressive growth in the past few months. Also, Sri Lanka’s geographical positioning in the Indian Ocean, ease of doing business environment and the many trade agreements as well as trade concessions enjoyed by the country have helped build the island as a business hub in the South Asian region. Therefore, foreign businesses/investors could confidently explore business/investment opportunities in the country.
| Article Code : | VBS/AT/31082020/Z_6 |