Sri Lanka’s output is estimated to have fallen by 9.2 percent in 2022 as the government ran out of the foreign exchange needed to cover food and fuel imports while the rupee plummeted and imports contracted sharply, and to service external debt, the World Bank says.
The global financial institution raised concerns about the continuing shortages of food, energy and medical supplies facing the island nation while the authorities are implementing a stabilization program.
Stating that the crisis and its repercussions have increased poverty and reversed much of the country’s income gains over the past decade, the World Bank went on to note that tourist arrivals, an important source of foreign exchange, continue to be depressed with international arrivals last October about one-third of their 2019 level.
The global financial institution, in its outlook for the South Asian Region, noted that Sri Lanka’s output is expected to contract again this year, by 4.2 percent.
The forecast for 2023 growth has been revised down owing to the ongoing foreign currency shortages, the effects of higher inflation and policy measures designed to restore macroeconomic stability.