Plunged into its worst-ever economic crisis, Sri Lanka’s real GDP is expected to fall further 4.2 percent in 2023 from 9.2 percent this year and gain a positive 1 percent economic growth only in 2024.
To this end, the spotlight highlights two key experiences of the Asian financial crisis as lessons for Sri Lanka.
Firstly, the short-term measures needed to address structural weaknesses, buffers to mitigate external shocks and build resilience to future shocks. Secondly, critical policies to promote future growth.
This was revealed by the World Bank in its Global Economic Prospects latest report released this week. .
According to the WB report, Sri Lanka will remain the only South Asian economy to suffer contraction in 2022 and 2023.
“In the face of the economic crisis, and ever increasing poverty Sri Lanka will need to expand employment in industry and services and recover real value of incomes to mitigate the impacts of the crisis, and build long-term resilience of its people
Bangladesh 2022 growth forecast is 5.2percent in 2022/23 and 6.2 percent in 23/24. India’s growth is 6.9percent and 6.6percent in 22/23 and 23/24. Pakistan’s figures are 2 and 3.2 percent respectively
Sri Lanka’s economic crisis is deepening with unsustainable debt and a severe balance of payment crisis on top of lingering scars of the COVID-19 pandemic.
The combined effects of COVID-19 and the record-high commodity prices due to the war in Ukraine took a heavier toll on Sri Lanka, exacerbating its debt woes and depleting foreign reserves. Plunged into its worst-ever economic crisis.
Debt restructuring and the implementation of a deep reform program are critical for Sri Lanka’s economic stabilization, says the World Bank in its latese economic prospects update, underscoring the need for Sri Lanka to build resilience.
According to the World Bank, Sri Lanka will remain the only South Asian economy to suffer contraction in 2022 and 2023. Bangladesh 2022 growth forecast is 5.2% in 2022/23 and 6.2% in 23/24. India’s growth is 6.9% and 6.6% in 22/23 and 23/24. Pakistan’s figures are 2% and 3.2% respectively.
The report said that the economies of the South Asia region (SAR) continue to be adversely affected by shocks emanating from the Russian Federation’s invasion of Ukraine, including higher food and energy prices, and by the tightening of global financial conditions as central banks in the region and elsewhere act to fight high inflation.
“Protecting the vulnerable is critical as Sri Lanka fast tracks deep reforms to navigate the deepening economic crisis.
The crisis calls for immediate action to protect the poorest and most in need while also focusing on strengthening the social protection system,” said Faris H. Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka.
