Monthly Economic Update: February 2022


  • Trade Deficit Expanded further in 2021 despite a Record Setting Year for Exports
  • Inflation rises further in January 2022; Marginal increase in FDI during 2021
  • Global Growth is expected to Decelerate in 2022

Sri Lankan Economy

Global Economy​

Trade Deficit Widened in 2021: Despite the record performance in exports, the trade account balance widened by around 35% to over USD 8 Bn in 2021. The highest ever monthly trade deficit of USD 1.08 Bn recorded during Dec 2021 was one of the key factors for the overall trade deficit growth.

PMI Expanded in January 2022: Both the manufacturing and services Purchasing Managers’ Indices (PMIs) continued to expand in January 2022 as well.

Tourism Recovery Continues in early 2022: Sri Lanka received 82,327 tourist arrivals in January 2022 and earned USD 261 Mn which is remarkably higher than that the amount earned in the same month of last year.

Marginal Increase in FDI inflows in 2021: During the first nine months of 2021, Sri Lanka received USD 558 Mn as FDIs which is slightly higher than USD 555 Mn received during the same period of 2020. Highest inflows were received for telephone and telecommunication networks followed by housing and property developments.

Inflation Rises Further in January 2022: CCPI headline and core inflation accelerated to 12.2% and 9.9% respectively in January 2022 on a Y-o-Y basis while national inflation rose to 16.8%.

Budget Deficit widened by 10%: During Jan-Nov of 2021, overall budget deficit increased to Rs. 1,709 Bn, which is 10% higher than the deficit recorded in the same period of 2020.

Global Growth is expected to Decelerate in 2022-IMF: The global economy is expected to decelerate in 2022 as the new Omicron variant spreads and countries reimpose mobility restrictions.

Global Trade is expected to Slow as Demand Moderates: After reaching 9.5% in 2021, the World Bank is expecting that the global trade growth will slow to 5.8% in 2022 and to 4.7% in 2023, as demand moderates.

Market volatile over Russia-Ukraine Crisis: Global markets have been volatile over the crisis brewing between Russian and Ukraine. Oil prices were fluctuating during the last few weeks edging close to USD 100 a barrel.