CB Governor still hopeful of 3% growth

Despite the negative growth largely expected for the first quarter, the Central Bank does not think the coronavirus pandemic will completely decimate the economy beset by the lockdowns and would still be able to register at least 3.0 percent growth for 2020.

The Central Bank Governor Professor W.D. Lakshman speaking on the measures taken to stem the spread of the new coronavirus said the projections for the first three months of the year is pointing towards a negative growth, although the official numbers are yet to come. 

The Central Bank has originally forecasted a growth north of 4.5 percent for this year. However, when the initial risks from the virus appeared, the Central Bank in early March trimmed its growth forecast to 3.5-4.0 percent.

Although the economy has virtually ground to a halt with the curfews being imposed, Prof. Lakshman believes the things could start returning to normalcy in about two months.

“I do not know what the medical professionals would say but I would like to believe that this could last about two months before things returning to normalcy,” he said participating in a live television programme a couple of days ago.

The Central Bank has made available a Rs.50 billion refinance facility to provide liquidity support to small businesses and individuals impacted by the economic fallout of the virus and has invited all banks and finance companies to take part in delivering these reliefs.

Murtaza Jafferjee, an economist and the Managing Director of J.B. Securities—a Colombo-based stock brokerage and research hose—recently said Sri Lanka was likely to record a negative economic growth for this year.

“It is likely that 2020 will also be one of negative growths. With this shock, it is highly likely we will have a year of negative growth and will have an absolute blowout budget deficit of close to 10 percent of GDP,” he said.

Meanwhile, last week the Asian Development Bank said the virus could cost the Sri Lankan economy up to 1.5 percent of its GDP.

The Treasury Secretary, Sajith Attygalle, who also took part in the television discussion with the Central Bank Governor, stressed that the notion of the entire economy had been shut down is misleading.

“The shop is entirely not closed,” he said in a lighter vein referring to many economic activities that are being carried out as essential services. Some of the export industries are also at work.