(NewsRadio); The Asian Development Bank is forecasting Sri Lanka’s economy to contract by 8.8 percent this year.
Sri Lanka has been dealing with the worst-financial crisis in the modern history.
Sri Lanka also defaulted on its foreign debt earlier this year and is still struggling to source funds to pay for imports.
In that backdrop, the Manila, Philippines-based lending agency has projected Sri Lanka’s economy to contract by 8.8 percent, down from a 3.3 percent pace of growth last year.
Meanwhile, the ADB has put inflation in Sri Lanka at nearly 45 percent this year.
The Asian Development Bank has also downgraded its forecasts for growth in the region, citing the war in Ukraine, rising interest rates to combat decades-high inflation, and China’s slowing economy.
The lending agency revised its estimate for growth in developing Asian economies to 4.3 percent, down from an earlier forecast of 5.2 percent.
Growth in 2023 was cut to 4.9 percent from 5.3 percent in the revised regional outlook released today.
ADB economists said that for the first time in three decades, other developing Asian economies would grow faster than China’s.
The updated outlook forecast that the world’s second-largest economy would expand at a 3.3 percent annual pace this year, down from 8.1 percent in 2021 and far below the ADB’s April estimate of a 5.0 percent expansion.
The setback represents a long-time slowing of China’s growth coupled with disruptions from outbreaks of COVID-19 and lockdowns and other measures to fight the virus.
India and Maldives were forecast to see the fastest expansions, at 7 percent and 8.2 percent, respectively.
Meanwhile, the ADB’s forecast for inflation in Asia remains less severe than in the U.S. and some other economies, at 4.5 percent in 2022 and 4.0 percent next year.
But the report put inflation in Sri Lanka at nearly 45 percent this year, while prices were forecast to rise 16 percent in Myanmar and nearly 15 percent in Mongolia.
Inflation has also risen sharply in Laos and in Pakistan, two other countries with economies imperiled by rising debt burdens and weaker growth.
Surging costs for grain and for oil and gas have been the main factors behind price increases, the report showed, noting that “While global food and energy prices have been decreasing recently, it will take time for these declines to translate into lower domestic prices.”
Most Southeast Asian economies are expected to keep up a robust pace of growth as they reopen to tourism and demand recovers.