COLOMBO (NewsRadio); The World Bank has projected Sri Lanka’s economy to contract 4.2 percent in 2023.
According to the World Bank’s latest Global Economic Prospects report, Sri Lanka’s economy will only start growing next year.
The World Bank expects Sri Lanka’s GDP growth in 2024 to be 1 percent.
Meanwhile, according to its estimates, Sri Lanka’s economy had contracted by a massive 9.2 percent last year.
The World Bank said, in Sri Lanka, 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, and to service external debt.
The World Bank in its report said, the economies of the South Asia region continue to be adversely affected by shocks emanating from the Russian Federation’s invasion of Ukraine, including higher food and energy prices, and by the tightening of global financial conditions as central banks in the region and elsewhere act to fight high inflation.
Several economies, however, maintained resilient growth despite the global economic backdrop.
In India, which accounts for three-fourths of the region’s output, growth expanded by 9.7 percent on an annual basis in the first half of fiscal year 2022/23 (April-March), reflecting strong private consumption and fixed investment growth.
According to the World Bank’s latest Global Economic Prospects report, overall global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.
The World Bank said, given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession.
This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
The World Bank said the global economy is projected to grow by 1.7 percent in 2023 and 2.7 percent in 2024.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 percent of advanced economies and nearly 70 percent of emerging market and developing economies.
Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8 percent—a full percentage point lower than the 2010-2019 average.
The World Bank added that by the end of 2024, GDP levels in emerging and developing economies will be roughly 6 percent below levels expected before the pandemic.
Although global inflation is expected to moderate, it will remain above pre-pandemic levels.
The report offers the first comprehensive assessment of the medium-term outlook for investment growth in emerging markets and developing economies such as Sri Lanka.