Central Bank of Sri Lanka released its report on “Recent Economic Developments: Highlights of 2020 and Prospects for 2021”. The Report can be downloaded from the website of the Central Bank of Sri Lanka in all three languages.
In addition to the regular update on economic developments, the Report also presents an update to the medium term macroeconomic projections published by the Central Bank in April 2020, taking into account the information available up to mid-October 2020. The publication of the Report this year comes at a crucial juncture as the economy continues to navigate through multipronged socio-economic challenges and uncertainties caused by the COVID-19 pandemic.
According to the Report, the Sri Lankan economy, which experienced below potential growth in recent years, encountered renewed challenges amidst the outbreak of COVID-19. Reflecting the combined effects of the spread of COVID-19 locally and the introduction of lockdown measures, the slowdown in global economic activity, and the adverse weather conditions in the country, the economy contracted by 1.6 per cent in the first quarter of 2020, year-on-year, as per the provisional estimates of the Department of Census and Statistics (DCS). GDP estimates for the second quarter have not yet been released by the DCS citing difficulties in capturing the true nature of disruptions and new activities as well as novel ways of working that emerged this year with the onset of the pandemic. Nevertheless, high frequency data point towards a strong recovery in many areas of economic activity in more recent months prior to the resurgence of COVID-19 infections and resultant containment measures in October 2020.