Asian Economy: Overview, Growth and Development.

Sri Lanka's economy shrinks 11.8pc

Sri Lanka's economy shrank 11.8 percent in the July-September quarter from a year ago, the second worst for the country, government data showed on Thursday, as it struggled with deep unrest sparked by its most severe financial crisis in decades.

An acute dollar shortage, caused by economic mismanagement and the impact of the COVID-19 pandemic, left Sri Lanka short of dollars for essential imports including food, fuel, fertiliser and medicine.

The state-run Census and Statistics Department said that agriculture shrank 8.7 percent in the third quarter and industries 21.2 percent, while services dropped 2.6 percent, from a year earlier.

"This is the second worst contraction Sri Lanka has experienced in a quarter after a 16.4 percent contraction in the second quarter of 2020," said Dimantha Mathew, head of research at First Capital.

"Our projection was that it would be much worse - possibly a contraction of about 20 percent but now overall contraction for the year could be about 9 percent."

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