Tourism, Factory Restarts Temper Sri Lanka Economic Contraction - Bloomberg

According to a report by Bloomberg, Sri Lanka's economy will likely contract slower in the last quarter due to positive developments in the tourism sector and some industrial activities. However, the country continues to face challenges such as high borrowing costs and increased taxes.

 

 

Based on a survey of economists, the gross domestic product (GDP) is expected to have contracted by 8.9% in the three months leading up to March compared to last year. Although this contraction is still significant, it represents an improvement compared to the previous quarter, when the economy shrank by 12.4%, the most significant decline in two years.

 

 

The consecutive decrease in inflation over the past four months has provided some relief and allowed the monetary authority to lower its benchmark interest rate in June unexpectedly. This rate cut, the first since July 2020, aims to support the country's recovery efforts.