CB forecasts over 2% growth in 2Q

„Says manufacturing and agricultural activities remain untouched by Easter bombings

„Hopeful of over 3% growth this year on faster growth in 4Q due to base effect

The Central Bank estimates that the economy has grown by around 2.1 percent in the second quarter of this year despite the economic impacts of Easter Sunday attacks. “As per our estimates, the second quarter growth will be little over 2 percent, around 2.1 percent” Central Bank Governor Dr. Indrajit Coomaraswamy said.

Even though the tourism sector took a massive hit from the Easter Sunday attacks, he noted that the impacts to other sectors of the economy including services were short-lived and re-bounded soon.

In particular, he pointed out that manufacturing and agriculture sector activities remained almost untouched by Easter attacks.

The Governor was confident Sri Lanka will be able to reach 3.1 percent economic growth for the year, betting on faster growth in the fourth quarter due to base effect from low growth of 1.8 percent in 4Q18. However, he pointed out that high lending interest rates coupled with elevated uncertainties have impacted private sector credit growth, slowing down business activities.

Sri Lanka’s private sector credit growth continued to decelerate to 7.7 percent Year-on-year (YOY) in July compared to 8.7 percent in the previous month, which was also the lowest growth rate witnessed since December 2014. The private sector credit also declined in absolute terms by a marginal Rs.1.2 billion in July after a significant increase of Rs.63.2 billion in June. In particular, credit decelerated to agriculture, industry and services sectors in the second quarter while consumption-based loans accelerated.

The cumulative increase in private sector credit stood at Rs. 42.5 billion during first seven months of the year.

Sri Lanka’s economy grew by 3.7 percent YOY in the first quarter of this year.