Sri Lanka’s economy is projected to contract by 4.3 per cent in 2023 says the World Bank

The World Bank on Tuesday announced that Sri Lankan economy is projected to contract by 4.3 per cent in 2023 as demand continues to be subdued, job and income losses intensify. The World Bank in its twice-a-year update said Sri Lanka’s heightened fiscal, external, and financial imbalances and its fluid political situation pose significant uncertainty for the country’s economic outlook. It added that these factors underscore the need to address the root causes of the country’s economic crisis and build a strong and resilient economy to prevent future crises. Faris H. Hadad-Zervos, World Bank country director for Maldives, Nepal, and Sri Lanka said “the economic crisis in Sri Lanka has had deep impacts with over half a million jobs lost and 2.7 million additional people falling into poverty between 2021 and 2022. “The prolonged recovery from the scarring effects of this crisis in addition to a slow debt restructuring process, limited external financing support, and an uncertain global environment poses significant risks to the country’s economic growth,” the country director said. According to the World Bank, the economy will continue to face significant challenges in 2023 and beyond, and lower-level external trade equilibrium could have contagion effects on domestic trade, economic activity, jobs and incomes. Strong and effective implementation of the government’s reform programme, supported by financing from international partners, could boost confidence and attract fresh capital inflows that are key to improving job prospects and restoring livelihoods, said the World Bank.