{"id":127987,"date":"2022-08-18T16:22:56","date_gmt":"2022-08-18T23:22:56","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=127987"},"modified":"2022-08-18T16:22:56","modified_gmt":"2022-08-18T23:22:56","slug":"sri-lanka-warns-of-8pc-economic-contraction","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2022\/08\/18\/sri-lanka-warns-of-8pc-economic-contraction\/","title":{"rendered":"Sri Lanka warns of 8pc economic contraction"},"content":{"rendered":"

Courtesy The Daily Star<\/em><\/span><\/h2>\n\n\n

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Workers carry a basket of watermelons at a wholesale vegetable and fruit market amid an ongoing economic crisis on the outskirts of Colombo. Sri Lanka defaulted on its $51 billion foreign debt in April and is seeking an International Monetary Fund bailout after months of food, fuel and medicine shortages. PHOTO: AFP\/FILE<\/p>\n\n\n\n

Sri Lanka’s economic meltdown will result in a record contraction of at least eight percent this year but the public could soon expect some relief from runaway inflation, the head of the country’s central bank said Thursday.<\/p>\n\n\n\n

The island nation defaulted on its $51 billion foreign debt in April and is seeking an International Monetary Fund bailout after months of food, fuel and medicine shortages.<\/p>\n\n\n\n

For all latest news, follow The Daily Star’s Google News channel.<\/a><\/h4>\n\n\n\n

Its 22 million people have also suffered through lengthy blackouts and spiralling cost-of-living pressures after scarcity and a currency crash drove up prices.<\/p>\n\n\n\n

The Central Bank of Sri Lanka had already projected the economy could shrink a painful 7.5 per cent for the calendar year, dwarfing the previous record 3.6 per cent contraction in 2020 as the pandemic raged.<\/p>\n\n\n\n

“But now we think it will exceed 8.0 per cent,” governor Nandalal Weerasinghe told reporters in Colombo.<\/p>\n\n\n\n

He said inflation — officially running at 60.8 per cent — will peak at “about 65 per cent” in September, followed by a gradual easing caused by lower demand and improvements in supplies.<\/p>\n\n\n\n

The foreign exchange shortage that sparked the economic crisis had eased thanks to better currency inflows and lower imports, he added.<\/p>\n\n\n\n

“We are now able to finance the most essential imports such as petrol and diesel and medicines,” Weerasinghe said.<\/p>\n\n\n\n

At the peak of Sri Lanka’s fuel shortages, motorists had to wait for days and sometimes weeks to top up, but strict fuel rationing has shortened queues.<\/p>\n\n\n\n

Months of protests over the collapsing economy culminated in the resignation of president Gotabaya Rajapaksa, who was forced to flee his official residence after it was stormed by a huge crowd last month.<\/p>\n\n\n\n

Rajapaksa is accused of mismanaging the island nation’s economy to the point where it was unable to finance even the most essential imports.<\/p>\n\n\n\n

He has since travelled to Thailand and close associates have said he was desperate to return home, where he faces corruption charges that had been suspended because of his presidential immunity.<\/p>\n\n\n\n

The political upheavals last month stalled talks with the IMF, but a delegation from the international lender of last resort is expected in Colombo before the end of August.<\/p>\n\n\n\n

Weerasinghe said he was hopeful authorities would finalise a staff-level agreement with the Fund later this month ahead of a formal bailout deal.<\/p>\n","protected":false},"excerpt":{"rendered":"

Courtesy The Daily Star Workers carry a basket of watermelons at a wholesale vegetable and fruit market amid an ongoing economic crisis on the outskirts of Colombo. Sri Lanka defaulted on its $51 billion foreign debt in April and is seeking an International Monetary Fund bailout after months of food, fuel and medicine shortages. PHOTO: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[102],"tags":[],"class_list":["post-127987","post","type-post","status-publish","format-standard","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/127987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=127987"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/127987\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=127987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=127987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=127987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}