government projects economy to contract by 10% in 1Q

• Economy expected to contract by 3% this year
• Says positive growth only expected from 4Q onwards

While ruling out a swift economic recovery, the government projected the economy to contract by around 10 percent in the first quarter, with an overall 3 percent contraction in the economy for this year.

“We cannot expect the economy to miraculously rebound in a short period of time, after contracting by 12.4 percent (in the fourth quarter of last year),” Finance State Minister Ranjith Siyambalapitiya said.

He noted that Sri Lanka is on the path for a gradual economic recovery, after the economy contracted by 1.6 percent in 1Q22, 8.4 percent in 2Q22, 11.8 percent in 3Q22 and 12.4 percent in 4Q22.

According to him, the economy is projected to contract by 10 percent in 1Q23 and is only expected to record a positive economic growth in the final quarter of this year.

“We are only expecting a positive growth from the fourth quarter onwards. In 2024, the economy will record a positive growth,” he added.

Commenting on the 7.8 percent economic contraction last year, amid an unprecedented economic crisis, followed by a political crisis and social tensions, Siyambalapitiya identified the contraction as a “serious situation”.

However, he stressed that the economy could have shrunk by around 20 percent in this quarter, if the current government didn’t assume responsibility to tackle the economic crisis while restoring social order.