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Sri Lanka’s economy expands by 4.5% in the 4th Quarter 2023

By: Staff Writer

March 17, Colombo (LNW): Sri Lanka’s economy grew sharply by 4.5% year on year in the four quarter but ended 2023 with a 2.3% contraction, the Department of Census and Statistics (DCS) revealed yesterday

The economy expanded for a second straight quarter as industrial activity picked up pace, buoyed by an International Monetary Fund bailout and lower interest rates.

In the 4th quarter of 2023 the economy bounced back by reporting a 4.5% positive growth rate compared to the reported 12.4% negative growth rate in the same quarter of 2022. In the fourth quarter of 2023 Agricultural, Industrial and Services activities grew by 0.6%, 7.9% and 2.8% respectively.

The 4Q growth of 4.5% was in comparison to 1.6% in 3Q and negative growth of 3% and 10.7% in the preceding quarters of 2023. In 2022 the economy suffered the worst contraction of 7.8%.

DCS said “Sri Lanka’s economy experienced some kind of duality in 2023 since the first half of the year the economy recorded negative growth while for the rest of the half, the economy bounced back to report a positive growth.”

It said in the midst of 2023 the uncertainty about the exchange rate which was observed for a while was transformed creating stability in foreign currency inflows through workers’ remittances.

Furthermore the long-awaited boom in tourism was coming towards the end of the year by strengthening the expectations of a good economy.

However, it was observed that some of the economic activities such as manufacturing industries and construction industry have been affected adversely due to the prevailing high input prices.

Further, when compared to the previous year, for most of the agriculture activities, availability of inputs without shortage, has been affected to report favourable growth rates in many crops and paddy cultivation.

In addition, the Gross Domestic Product of Sri Lanka for the year 2023 at current prices increased up to Rs. 27,629,665 million from Rs. 24,063,762 million which was recorded in the year 2022 registering 14.8% of positive change in the GDP at current prices.

For the year 2023, overall Agricultural activities expanded by 2.6% while Industrial and Services activities contracted by 9.2% and 0.2% respectively in the year 2023.

Industrial production expanded 7.9% from a year ago, while services sector rose 2.8%, the data showed.

Increased inflows from tourism and remittances have also helped Sri Lanka’s turnaround. 

The nation’s leisure sector is seeing a revival to pre-Covid levels, with earnings from visitor arrivals posting the highest value in four years in January.

 Its local rupee is at the strongest level since June, gaining 6% against the dollar this year.

The overall Agricultural activities in 2023 expanded by 2.6% while Industrial and Services activities contracted by 9.2% and 0.2% respectively.

Services sector accounted for 59.9% of GDP in 2023 and Industry’s share was 8.3% whilst Agriculture accounted for 8.3%. Taxes less subsidies on products’ components contributed 6.2%.

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