Sri Lanka's economy shows signs of recovery, World Bank predicts growth in 2024

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Sri Lanka's economy shows signs of recovery, World Bank predicts growth in 2024

Sri Lanka's economy is showing signs of recovery, with the World Bank projecting a better-than-expected performance for 2023, despite a significant contraction. The global financial institution expects the island nation's economy to grow by 1.7% in 2024, following a contraction of 3.8% in 2023, as reported on Tuesday.

The World Bank previously forecasted a contraction of 4.2% for this year and a growth of 1% in 2024. However, the recent projection represents an improvement in the economic outlook for Sri Lanka.

In the second quarter of the year, the Sri Lankan economy shrunk by 3.1%. Despite these challenges, the country has seen several positive economic indicators over the past six months. Inflation has dropped to 1.3% in September, and the local currency appreciated by approximately 12%. Furthermore, foreign exchange reserves have seen an improvement.

In March, Sri Lanka secured a $2.9 billion bailout package from the International Monetary Fund (IMF). Nevertheless, due to potential shortfalls in government revenue, the release of a second tranche from this package may be delayed.

Contrary to the World Bank's projections, Sri Lanka's central bank has predicted a milder contraction of 2% this year. This came after the economy experienced a significant contraction of 7.8% in 2022. As such, while there are signs of recovery, it appears that Sri Lanka's economic journey out of recession will continue into next year.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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