Business

IMF cuts SL growth rate after Covid-19 surge

 

  • Forecasts 3.6% from previous 4% for 2021
  • May and August waves take toll on economy

 

In a recently released report, the International Monetary Fund (IMF) has forecast Sri Lanka’s gross domestic product (GDP) growth rate to be around 3.6% this year from the previous forecast of 4% with uncertainties that have arisen with the global emergency situation.

Meanwhile, the IMF has predicted the global economic outlook to grow by 5.9% this year and 4.9% next year, as the pandemic continues to prevail. 

Explaining the global outlook, IMF Economic Counsellor and Director of Research Department Gita Gopinath stated: “There are risks. (I think) the risks are because we (IMF) are seeing more supply‑side shocks as opposed to demand‑side shocks because of the breakdowns in the supply chains, because of the rise in commodity prices, and also because of the pandemic, but also weather‑related events. Both of those contribute to the kinds of firms facing shortages and because of those shortages, they are producing less.” 

Issuing a communiqué in September, on releasing National Accounts Estimates, the Department of Census and Statistics (DCS) stated that the year-over-year (YoY) GDP growth rate for the second quarter of 2021 has been estimated as a 12.3% positive growth rate. This positive growth comes against the backdrop of a 16.4% contraction in the economy reported in the second quarter of last year. 

In addition, the GDP for Sri Lanka for the second quarter of 2021 at the current price has increased up to Rs. 3,626,482 million from Rs. 3,007,345 million, which was recorded in the second quarter of 2020, registering a 20.6% change in the current price GDP. 

Meanwhile, the Central Bank of Sri Lanka (CBSL) noted that the Sri Lankan economy has grown by 8% in the first half of this year.