Sri Lanka's growth forecast for 2019 down to 2.7% : World Bank

COLOMBO (News 1st) The World Bank in its latest global economic update has slashed Sri Lanka's growth forecast to 2.7% for 2019. In line with a global downward trend, growth in South Asia was projected to slow down to 5.9% in 2019; reducing 1.1% from April 2019. However, the report remains cautiously optimistic that a slight rebound in investment and private consumption could jumpstart South Asia’s growth up to 6.3% in 2020, slightly above East Asia and the Pacific, and 6.7% in 2021. In June this year, the World Bank adjusted Sri Lanka’s growth forecast to 3.5%, from 4% that was projected earlier in January. During the 6th monetary review last Friday, the Central Bank said it had not revised its growth forecast of 3% as yet. Journalist: What's the Central Banks' latest growth forecast? Governor: We did not revise our growth forecast as of yet. Let's see what happens in the third quarter. He further added that when there are elections, there will be a lot of activity that will take place, its a bit outside of the normal pattern of economic activity. So those must be captured. So it's difficult to say. He added that the Central Bank expected about US$ 5bn of receipts from the tourism industry this year. However it's reduced to US$ 3.7bn and in addition, there has been some decline in earnings from shipping, because the Indian economy has slowed down. He went on to note that almost 75% of the tonnage handled by the Colombo harbour is transhipment to India and this will have an impact on our shipping industry. Journalists also questioned the governor about the salary increase for state sector employees with effect from January next year. Governor stated that its a question that should be directed at the Ministry of Finance. He further added that if the salaries are to be increased they would have to stay within a specific framework and in order to do so either the government expenditure should be reduced or more revenue should be generated. Journalist: Is the salary increase in line with the IMF? Governor: When the IMF mission was in Sri Lanka, they were aware of some of the salary increases. To my knowledge, they agreed to some fiscal targets, which they were very flexible.