9 January 2025 05:30 am Views - 628
By Shabiya Ali Ahlam
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Dr. Nandalal Weerasinghe
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As Sri Lanka has managed to brave through what was the worst economic crisis faced in history and moving towards normalcy, the island nation’s financial sector regulator yesterday said that its focus this year would be on achieving a “transformative acceleration” in the growth trajectory.
Central Bank Governor Dr. Nandalal Weerasinghe noted that this is essential to catch-up and enhance the growth potential, as it would also help uplift the debt-carrying capacity of the country.
“Building buffers to withstand the shocks and accelerating growth without compromising on economic and financial system stability is the essential next step for the country’s progress,” said Dr. Weerasinghe.
As Sri Lanka now stands stronger with restored macroeconomic and financial sector stability, following several difficult years, according to Dr. Weerasinghe, sustaining stability in the medium to long run remains conditional on the country’s commitments to pursue the necessary economic reforms.
He asserted that the Central Bank would continue its role in maintaining domestic price stability and safeguarding the financial system stability, while supporting the economy to reach its potential.
While recovery was observed since the second half of 2023, the economy rebounded strongly in 2024, initially benefiting from the base effect but also supported by the accommodative monetary policy and a low-inflation environment.
In the first three quarters of 2024, the economy is estimated to have grown by 5.2 percent, largely due to the key economic sectors recording expansions. Building on the momentum in economic activity, leading economic indicators of industry and service sectors reflect a continuation of the expansion in output in the last quarter of 2024 as well.
The Central Bank stated that in 2024, real GDP is projected to have grown by around 5 percent, registering the highest annual growth since 2017.
“This higher-than-expected growth also provides evidence that deflation in recent months was not due to the demand factors but mainly due to the supply-side factors, including the administrative price adjustments,” the Central Bank said.