Monthly Economic Update: January 2022

First Policy Rate Hike by the CBSL for 2022: The Central Bank of Sri Lanka increased policy rates by 50 basis points in January 2022 in order to strengthen macroeconomic stability. 

CBSL Revises Growth Target to 4% in 2021: As economic activity returning to normalcy along with the successful vaccination drive of the government, the CBSL is expecting a 4% growth of the economy in 2021. 

Exports Continues Momentum in November 2021: Export earnings recorded the highest monthly value in the history while marking the sixth consecutive month of above USD 1 Bn of exports in November 2021. Imports also increased at a higher rate and reflecting the favorable impact of increased exports, trade deficit narrowed by 8% in November 2021.

Tourist Arrivals Promising in 2022, despite Omicron fears: Developments in the tourism industry appears to be promising with the influx of tourists in recent months. Around 59,000 visitors arrived in Sri Lanka during the first three weeks of 2022, mostly from Russia and India, and the tourism authority expects to see around 1 million tourists during the year.

Credit to Private Sector Continue to Expand: Credit extended to the private sector, which slowed down during September and October 2021, has picked up in November (13.1%), partly reflecting the increased credit flows to finance imports.

Reserves end 2021 at USD 3.1 billion: Reserves increased to USD 3.1 billion reportedly with the conversion of USD 1.5 billion swap arrangement with the Peoples Bank of China. The CBSL is expecting to improve the reserves position with the expected support from India and other bilateral partners.