A research report published by HSBC Global Research last December expects Sri Lankan GDP to grow by 7% y-o-y in 2021, largely due to base effects since they estimated a 5% drop in GDP during 2020, new President of the National Chamber of Commerce of Sri Lanka (NCCSL) Nandika Buddhipala told the 62nd AGM at Kingsbury Hotel on Tuesday.
Rating agencies including Fitch and Moody’s predict growth. Fitch in September 2020 estimated GDP growth for 2021 as 4.7%, whereas for 2020 they estimated a negative growth of 3.7%. Moody’s on September 29, 2020, estimated GDP growth in 2021 to be 3.6% whereas in 2020 they estimated negative growth of 3.2%. All rating reports expressed their concerns regarding Lankan debt sustainability and the government revenue collection target.
The Sri Lankan economy was gradually recovering from the severe impact of the Easter Sunday terrorist attacks in 2019 when the country was hit with the global pandemic.
Buddhipala said that as a strategy to face the difficult situation the Central Bank introduced many measures. The regulator acted to reduce interest rates, enhance market liquidity, manage foreign exchange flows, maintain exchange rate stability, preserve international reserves, maintain the financial system stability, enhance credit flows, and ensure uninterrupted currency operations.
“Lower interest rates reduced the burden on entrepreneurs who were facing various difficulties, while announced debt moratoria and working capital loan schemes provided concessions to businesses and individuals.”