Sri Lankan economy down to 6-year low last year in negative growth
Sri Lanka’s economic downturn last year has pushed country’s fiscal and monetary situation almost similar to the level six years ago.
Sri Lanka’s economic output as measured by Gross Domestic Product (GDP) for the year 2022 recorded as 7.8 per cent of negative growth year-on-year, the Census and Statistics Department (DCS) data showed.
The DCS has released the estimated Gross Domestic Product (GDP) at current price and at constant (2015) price in production approach and the other macroeconomic indicators for the year 2022.
The GDP for the year of 2022 at constant price (2015) has declined to Rs. 12,017 billion from Rs. 13,037 billion which was recorded in the year of 2021 compared to the similar level of Rs. 12151 billion in 2016, Finance Ministry data indicated.
The DCS report attributed contraction of the whole economy to the deepening of the economic crisis and youth and social unrest which began in the early part of the year 2022.
The year-on-year GDP growth rate for the year 2022 has been reported as 7.8 per cent of negative growth rate.
The overall agriculture, industry and services activities dropped by 4.6 per cent, 16 per cent and 2 per cent respectively, in 2022.
In addition there were recurrent power disruptions, shortages in fuel, raw materials, foreign currency issues which resulted supply chain distractions, amidst price hike in both domestic and global markets.
This has affected adversely the whole production process of agriculture, industry and services, according to the DCS.
Foreign gross reserves were largely unchanged after rates were hiked in April and India stopped deferring import payments through the Asian Clearing Union.
As a result, the deficit in the trade account in 2022 narrowed to the lowest level since 2010 to US$5.18 billion, from $8.13 billion recorded in 2021.
Sri Lanka began 2022 with gross reserves of $3.1 billion but soon faced a decline in foreign inflows, and ran out of US dollars needed to pay for imports.
Workers’ remittances in 2022 recorded a decline of 31 per cent in comparison to $5,491 million in 2021, the Central Bank data shows.
According to the Central Bank’s report on external sector performance in 2022, the workers’ remittances amounted to $3,789 million last year, compared to $5491 million in 2021.
Sri Lanka ended 2022 with a cumulative $1,136.3 million in earnings from the tourism sector compared to $500 million in 2021.
How it got into this situation is now history. It’s a saga of fiscal imprudence, unsustainable exchange rate policy and mismanagement, official sources said.
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