LBO – PricewaterhouseCoopers (PwC) expects real GDP growth in the Island to be less than 2 percent this year even if the pandemic is contained by mid-2020.
Prior to the Coronavirus outbreak, the Central Bank expected the economy to grow at 4.5-5 percent with a modest recovery from the Easter Sunday attacks in April 2019 and the political stability after the Presidential elections.
However, given the increasing economic consequences from the Coronavirus pandemic, this growth target will likely be difficult to achieve.
Based on the ADB’s outlook as at 03 April 2020, the Sri Lankan economy is expected to grow at 2.2 percent in 2020.
Releasing a report on the COVID-19 impact on Sri Lanka, the PwC urges that a COVID-19 Economic Action Task Force should be set up to consider ways and means of managing the impacts to the economy in the short and medium-term and fast-tracking the implementation of necessary policies.
“We expect tourism earnings to decline significantly from the previous year’s USD 3.6bn, a figure already impacted by the Easter attacks, as compared to USD 4.3bn in 2018,” the report said.
Meanwhile, since the start of the year, the Sri Lankan Rupee depreciated against the US Dollar by approximately 9 percent as at 6 April 2020.
“We expect the Sri Lankan Rupee to experience further pressure. Hence adequate lines of foreign funding should be sought to manage short term pressures on the currency,” the report said.
“In the long term, a strong export base and sustainable FDIs will be critical for a strong currency. Export industries in our view should be provided a TAX-FREE status for a considerable length of time to attract investment, create employment and generate foreign exchange.”