AEIR 2018

Growth slowed dramatically to 3.1% in 2017 as bad weather shrank output from agriculture for a second year. Weaker growth in industry and services contributed to the slowdown. The ratio of revenue to GDP continued to improve as fiscal consolidation aligned with the government’s economic program, supported by the International Monetary Fund (IMF), to reduce fiscal and external vulnerabilities. Monetary tightening brought growth in credit to the private sector to a more sustainable rate of 14.7%, following 21.9% expansion in 2016. Weaker domestic demand lowers growth expectations for 2018 from 4.2% to 3.8%.

Growth over the next 2 years will depend on agriculture and the political climate as elections approach. The outlook has downside risks. Weather is an obvious concern. An unexpectedly large rise in global interest rates or volatility in capital markets could sharply limit planned borrowing and increase its cost.
Source: Asian Development Outlook 2018 Update, ADB.
Latest Month-Ago Year-Ago
Composite Stock Price Index 1 5.0 (Feb19)5.0 6.0
Broad Money Growth 2 14.5 (Nov18)14.5 14.3
Headline Inflation Rate 3 1.2 (Jan19)0.4 5.5
Industrial/ Manufacturing Production Growth Rate 3 1.2 (Dec18)-1.2 4.3
Merchandise Export Growth 3 4.1 (Nov18)4.1 0.3
Exchange Rate Index 4 175.0 (Feb19)178.1 151.7
1 Monthly average, local index.
2 %.
3 y-o-y, %.
4 Monthly average, January 2006 = 100, $/local currency.
Source: Bloomberg LP; CEIC database; Department of Census and Statistics; ; Central Bank of Sri Lanka.

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