Home / Front Page/ Sri Lanka quarterly growth slows to near 4-year low on political crisis

Sri Lanka quarterly growth slows to near 4-year low on political crisis


Comments / {{hitsCtrl.values.hits}} Views / Thursday, 21 March 2019 01:34


Reuters: Sri Lanka's last quarter economic growth slowed to a nearly four-year low, Government data showed on Tuesday, as a 51-day political crisis took a toll on the industrial sector. 

Colombo posted 1.8% growth in the fourth quarter of 2018, slowing from 3.45% the previous three-month period, its slowest pace since early 2014. 

The industrial sector, accounting for more than a quarter of the economy, contracted 3.6% in the fourth quarter of 2018, compared to 3.1% growth the previous period. 



The sluggish quarterly growth dragged the island's annual expansion to a 17-year low of 3.2%, compared to 3.4% the previous year. 

Sri Lanka faced a political crisis after President Maithripala Sirisena abruptly sacked his Prime Minister Ranil Wickremesinghe and dissolved Parliament. That was later ruled unconstitutional, and Wickremesinghe was reinstated. 

The crisis created panic and uncertainty among investors, who dumped Sri Lankan Government bonds and other assets, sending the rupee currency to record lows. 

“Most of the people say the manufacturing orders had an impact, both domestically and on the export side, with the huge currency depreciation mainly due to the political turmoil,” said First Capital Holdings Research Head Dimantha Mathew. 



The weak economic data may have a big negative impact on markets and businesses in the short-term, he added. 

During the political crisis, all three major rating agencies downgraded Sri Lanka. 

Foreign bondholders and share investors sold a net Rs. 66.6 billion ($ 373.32 million), while the International Monetary Fund suspended discussion to disperse the fifth tranche of a $ 1.5 billion loan. 

Finance Minister Mangala Samaraweera expects growth to pick up this year to a pace of 3.5%. 

Economists say tight monetary and fiscal policies, plus intermittent floods and drought, also contributed to lower growth last year. The rupee fell 16% in 2018 mainly due to foreign outflows from Sri Lankan securities.

 


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

Jothipala A unique playback singer who sang to joy, emotion and grief

Saturday, 29 February 2020

“Poruthukeesi Karaya, Ratawal Allanna Sooraya,” the lilting Baila song from ‘Sandesaya’ was the first Sinhala film song that I became immensely fond of as a little boy. I did not see the film ‘Sandesaya’ when it was first released in 196


For the love of my motherland Sri Lanka

Saturday, 29 February 2020

It is Monday 25 February 2020 as I hunt-and-peck my computer keyboard at Colombo International Airport Terminal 12 awaiting my flight to New York with my wife to attend a family funeral. I had been catching up on yester


China’s virus shutdown will hurt growth abroad

Friday, 28 February 2020

Many affluent Chinese fearful of being infected by the coronavirus and being quarantined by the State are staying home. Many companies and countries around the world are linked to the Chinese economy, which is likely to have far-reaching consequences


The reality of the system

Friday, 28 February 2020

The whole system of the country which has been crumbling is now on the verge of near collapse. The political regime, bureaucracy, intellectuals and the society in general did not have a sufficiently developed political imagination to understand the n


Columnists More