IMF Forecasts Sri Lanka's Economy To Shrink 4.6% This Year

The International Monetary Fund ( IMF) this week forecasted Sri Lanka’s economy to contract by 4.6 percent, significantly higher than a 0.5 percent contraction it predicted in April, as the coronavirus pandemic elated disruptions continuing to take a toll on the island nation’s fragile economy.

But expects growth to pick up in 2021 to 5.3% -- highest since 2012

SL’s economy remains under pressure due to high foreign debt and lower govt. revenue

Expects inflation to remain anchored at 4.5% in line with CB’s expectations

China, where coronavirus originated, to record 1.9% growth, India to shrink over 10%

However, the IMF noted that Sri Lanka’s economy may grow 5.3 percent in 2021— highest since 2012— where growth hit 9.1 percent, before slowing down to 4.8 percent in 2022.

Sri Lanka’s economy grew 2.3 percent in 2019 and recorded a 1.6 percent contraction in the first quarter of 2020.

However, the IMF’s 2020 growth forecast on Sri Lanka appears benign, compared to a recent World Bank forecast of a contraction as high as 6.7 percent.