Home > Economic Updates > MONTHLY ECONOMIC UPDATE - JANUARY 2019



EIU - January 2019


  • Global growth expected to ease in 2019 by most forecasters. China slows in 2018 to its lowest level since 1990. Outlook on growth a key driver of lower oil prices in December 2018.
  • The EIU expects Sri Lanka GDP growth in 2019 to be between 3.5-4% while World Bank expects it to be at 4%. The UN sees growth remaining below potential.
  • Sri Lanka to refinance USD 2.6 Bn in the first quarter of 2019 and USD 5.9 Bn for the full year of 2019. CBSL seeks fresh borrowings to refinance external debt.

 Sri Lankan Economy 

2019 Growth Expectations: As per the latest World Bank projections, Sri Lanka’s GDP growth is expected to speed up marginally to 4% in 2019 and remain at 4.1% in 2020 and 2021. The estimated growth for 2018 is 3.9% mainly due to the recovery in the agriculture and services sectors. The EIU of The Ceylon Chamber which recently launched its outlook publication for 2019 forecasts growth to be between 3.5-4% for the year. The UN expects Sri Lanka’s economic growth to remain below potential in the near term due to insufficient international competitiveness and vulnerability to external shocks.

Tourism Earnings Surpassed USD 4 Bn Mark in 2018: Sri Lanka surpassed USD 4 Bn in tourism inflows during 2018, registering a steady growth of 11.6% compared to 2017, as per the revised statistics released by the Sri Lanka Tourism Development Authority. Australia was noted as the fastest growing market while China, India, UK and Germany continued to be the leading tourism generating countries.

Current Account Deficit Narrowed: In November 2018, the deficit in the current account narrowed significantly following the decline in import expenditure. Exports grew by 4.1% while imports contracted by 9.1% compared to November 2017.  

Sri Lanka Tops the World’s Highest Real Interest Rates: As per Bloomberg, Sri Lanka ranked as the country offering the highest real interest rate followed by Egypt, Pakistan, India and Turkey. Three out of the five countries with world’s highest real interest rates are from South Asia.

Challenging Debt Refinancing Period for SL: The economy has a challenging period in terms of debt refinancing with USD 5.9 Bn to be refinanced in 2019 of which USD 2.6 Bn will be in the first three months of 2019. The CBSL has already repaid the USD 1 Bn sovereign bond that matured on 14 January 2019 and is looking to raise further debt through sovereign bonds and syndicated loans. The CBSL secured a USD 400 Mn SWAP in early January from the Reserve Bank of India (RBI) under its SAARC SWAP facility. Sri Lanka is also set to resume staff level discussions with the IMF in mid-February in a bid to resume the loan facility. 

Foreign Outflows continue in first Four Weeks of January: The start of the year saw the continuation of outflows from the local Treasury bill and bond market with outflows of Rs 14.3 Bn. In 2018, foreign holdings declined close to Rs 160 Bn. Despite this, the LKR against the USD (spot) has appreciated by 0.6% in January 2019 so far (as at end 28 January 2019).


 Global Economy 

Global Growth to Ease to 2.9% in 2019: The World Bank recently forecasted a 3% growth for the global economy at the end of 2018 and expected growth to ease to 2.9% in 2019 as per its latest Global Economic Prospectus report. The view by most forecasters is that global growth has in fact peaked and 2019 could see a soft-landing for global growth.

Fall in Global Oil Prices: The OPEC Reference Basket fell in December 2018 for the second consecutive month, dropping by USD 8.39 to USD 56.94 per barrel. This is the lowest level since October 2017 and oil prices were pressured by concerns surrounding global oversupply and softening oil demand, amid high uncertainty about global economic growth.

China’s Growth in 2018 is the Lowest for Nearly Three Decades: China’s GDP growth for 2018 was recorded as 6.6%, the slowest pace since 1990. This economic slowdown is sharper than what was expected and has deepened in the latter part of 2018, with Q4 growth rising by 6.4% on a Y-o-Y basis.

Read more

The Ceylon Chamber of Commerce

Economic Intelligence Unit

Leave a Comment