CCC Chairman Vish Govindasamy (second from right) hands over outlook report to Central Bank Governor Dr. Nandalal Weerasinghe (second from left) in the presence of CCC CEO Manjula de Silva (extreme left) and Chief Economist Shiran Fernando
PIC BY KITHSIRI DE MEL

Sri Lanka’s economy will fare better this year than it did in the previous year, where the economy is estimated to have contracted by about 9 percent but consumption is expected to contract till about the second half of the year, the Ceylon Chamber of Commerce (CCC) said in its Sri Lanka Economic Outlook 2023. 

Economic Outlook 2023 by the CCC, launched this week, focused on the theme ‘Turmoil to Progress: Staying the Course’. 

While the increase in taxes will reduce disposable income in particular for middle-income earners, the CCC predicts interest rates to fall under 20 percent and the outlook on debt restructuring is expected to provide more clarity on rates.

Regarding the Sri Lankan rupee, the report pointed out that the stability of holding the currency at current levels revolves around the credibility via an International Monetary Fund programme. It cautioned that the rupee could further depreciate if confidence is weakened. 

One of the key focus areas of the government this year should be reforms, so that the country does not become a repeat offender in terms of defaulting on debt. 

The CCC pointed out that in terms of the reform agenda, there are many low-hanging fruits to improve coordination among state institutions.  

A key effort in that includes digitally connecting the revenue collection agencies such as Sri Lanka Customs, Excise and Inland Revenue Departments to establish better coordination of information and reduce revenue leakages.

The government would also have to bring in new legislation, such as the new Monetary Law Act, which will strengthen the independence of the Central Bank, to improve governance and resilience.

Further, other focus areas such as energy, agriculture, labour and land should be prioritised and initial steps are required to drive the reform momentum.