Lanka Growth Outlook Favorable

Sri Lanka’s growth is projected to rebound in 2018 and continue to be around 4.5% in the medium term, driven by private consumption and investment, the World Bank said in its latest report, Lanka Business online reported. “Inflation will stabilize at the mid-single digit level as the impact of natural disasters wears off, although the upward trend in oil prices may exert some upward pressure,” it said. “The outlook remains favorable, provided the government is committed to the reform agenda of improving competitiveness, governance and public financial management.” Together with the IMF program, these reforms will add to confidence and support fiscal consolidation efforts. The external sector will continue to benefit from the GSP+ preferential access to the European Union and tourism receipts, despite the deceleration of remittances. External buffers are expected to improve, with emphasis on purchasing foreign exchange, maintaining a more market-determined exchange rate, and increased foreign direct investments. The overall fiscal deficit is projected to fall in the medium term, supported by the ongoing implementation of revenue measures. Growth should continue to translate into poverty reduction and improvement in living standards.