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Rebound tipped for Sri Lankan economy

By XU WEIWEI in Hong Kong | China Daily | Updated: 2024-04-22 09:45

Sri Lanka has shown signs of economic recovery and is expected to log a positive turnaround in growth from this year onward, experts say.

Despite economic uncertainties, an increase in exports, public spending or financial reforms could eventually enable Sri Lanka to overcome the economic crisis, they said.

The Asian Development Bank in its latest report projected that Sri Lanka's economy will grow by 1.9 percent in 2024 and 2.5 percent in 2025 following two consecutive years of contractions.

It said the South Asian nation's economy contracted in the first half of last year but recorded 3 percent growth in the second half.

The forecasts for economic growth can be considered realistic given the recent economic performance of the Sri Lankan economy, noted Bernard Goonetilleke, chairman of Sri Lanka's think tank Pathfinder Foundation.

Relevant figures demonstrate the improving economic conditions, according to him. For instance, Sri Lanka's economy recorded a 4.5 percent year-on-year growth in the fourth quarter of 2023.

However, Goonetilleke said: "The country must further increase its exports to return to economic stability and be able to service its foreign debts, (after) the restructuring discussions are brought to a conclusion."

In its annual flagship publication, the Asian Development Outlook April 2024, the ADB said inflation in Sri Lanka will remain below 10 percent both this year and next year.

Attracting investments

The government expects to attract $4 billion to $4.5 billion in foreign investments this year, Minister of Investment Promotion Dilum Amunugama said recently. Last year, Sri Lanka attracted $1.8 billion of foreign investment.

Ahilan Kadirgamar, a political economist and senior lecturer at the University of Jaffna in Sri Lanka, said these targets and investments have had a limited impact on people's lives so far "as they are not going to increase employment in a major way or create the stimulus needed".

Early this month, Rajith Keerthi Tennakoon, the director general of community affairs at the President's Office, said the government of Sri Lanka has settled more than $1.9 billion in foreign debt and interest payments between President Ranil Wickremesinghe's assumption of office and February this year.

However, uncertainties remain.

"The critical barometer for the future economic directions will rest on the outcome of the presidential election later in the year," said Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the Business School of the National University of Singapore.

Xinhua contributed to the story.

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