Sri Lanka’s economy to shrink by 9.2 % this year

Sri Lanka’s gross domestic product (the economy) is expected to contract by 9.2 per cent in 2022 and a further 4.2 per cent in 2023, during the country’s worst economic crisis in the history, Finance Ministry latest data divulged.  

The economy will contract to US$ 66 billion next year (2023) from $144 billion this year and $89 billion in 2021.  

Sri Lanka’s rupee collapsed from 200 to 360 to the US dollar in 2022 after two years of money printing to control interest rates, leading to a loss of foreign reserves and sovereign default.

The country has also been affected by import controls worsening the effect of the currency crisis on real economic activity, the data revealed.

Meanwhile the government has been able to save around Rs. 600 billion during the first eight months this year from the sale of fuel due to the drop in international oil prices and reduce in petroleum consumption by 50 per cent owing to the petrol diesel and kerosene price hike, Ministry sources said.   

The fuel usage in January 2022 was 11142 metric tonnes and it dropped to 5516 MT in October this year and this was a reduction in sales by around 50 per cent, Energy Ministry data shows.

The revenue from the sale of fuel during the first eight months this year was Rs. 956 billion and the government has spent Rs. 357 billion for importation of fuel during this period.  

Therefore the government has been able to save around Rs. 600 billion but a sum of Rs. 513 billion was spent to service domestic debt, official sources said. (Bandula)