Standard Chartered Bank (SCB) yesterday (13) downgraded Sri Lankaâ€™s economic growth forecast for 2013 from 7.2 percent to 6.2 percent due to a slower-than-expected recovery.
“We see three reasons for a slower-than-expected recovery as the economy adjusts to bold central bank policy measures aimed at addressing growing imbalances: (1) more fiscal consolidation is required; (2) inflation is elevated, limiting room for near-term policy easing; and (3) the recovery in Sri Lankaâ€™s main trading partners, the EU and US, remains slow. That said, Sri Lanka looks well positioned to achieve slightly faster growth in 2013 than 2012?s 6.5% given that the policy bias is shifting towards supporting growth,” Standard Chartered Bank said in a report titled â€˜Standard Chartered Asia Focus: Transforming, rebalancing, outperformingâ€™ released Wednesday (13).
“In light of these concerns, we lower our 2013 GDP growth forecast to 6.7% from 7.2%; this also reflects the fact that 2012 was likely 6.5%, below our most recent 6.8% forecast,” Standard Chartered Bank said.
meanwhile, Sri Lanka is facing higher external pressure due to lack on a program with the IMF and also slower growth, Moody’s Investors Service, a rating agency said. “Although the govt will likely continue to make gradual progress in reducing its deficit, the debt burden will remain high,” Moody’s said. “The absence of a new funding program is credit negative from the perspectives of external payments and growth.