… growth magnitude tied to containing coronavirus

The Central Bank expects the country’s economic growth to rebound in 2021, and maintain the upward trajectory over the medium term, supported by pro-growth policies of the government.

“As projected under the medium-term macroeconomic framework of the CBSL, the economy is expected to grow by around 5.0 per cent in 2021,” the Central Bank said in its latest report on “Recent Economic Developments: Highlights of 2020 and Prospects for 2021?.

According to the monetary regulator, the economic growth is projected to contract by around 1.7 percent in 2020 compared to 2.3 percent growth recorded in 2019. It is predicted that the economy would recover during the second half of 2020 amidst the setback caused by the COVID-19 pandemic related disturbances.

The Industry related economic activities which were severely affected by the pandemic are expected to record a significantly high growth rate in 2021.

Major markets for Sri Lanka’s industrial exports are expected to normalize by early 2021 and contribute positively to the external demand for industrial exports thereby supporting the growth in manufacturing activities.

Services related economic activities are expected to continue its momentum during 2021. Investment activities are expected to grow significantly in 2021, supported by higher growth in private investments.

The outlook of the external sector, which is largely driven by the trade deficit, will depend on the global economic impact of the COVID-19 pandemic and the domestic policy responses.

Policies to boost domestic production are also expected to ease the pressure on the external sector of the economy on a sustained basis.

“Nevertheless, the success of containing COVID-19 locally and globally remains critical in determining the pace and the magnitude of domestic economic recovery and revival in the period ahead,” the Central Bank said in its report.

Inflation is expected to be maintained within the desired range of 4-6 percent over the medium term.