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Monthly Economic Update - October 2020

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3 KEY INSIGHTS

  • World Bank and IMF expects GDP growth to contract by 6.7% and 4.6% respectively in 2020; Recovery in 2021

  • “Exporters’ Outlook for Business and Economy Improves” finds the latest USAID and CCC COVID-19 Impact Survey

  • Global growth Projections of IMF revised upward in 2020 (though still negative), owing to better-than-expected growth in Q2

 

Sri Lankan Economy

World Bank and IMF expects GDP growth to contract by 6.7% and 4.6% respectively in 2020: Owing to COVID-19 related disruptions the Sri Lankan economy is expected to contract in 2020 and recover in 2021 to a growth of 3.3% and 5.3% as per the projections of the World Bank and the IMF respectively. 

Export Forecast Revised Higher: The Export Development Board (EDB) revised its forecast for merchandise and service exports in 2020 to USD13.39 Bn from USD 10.75 Bn target in April 2020. Merchandise exports in September surpassed the USD 1 Bn mark for the 3rd time in 2020. 

Exporters’ Outlook for Business and Economy Improves- USAID and CCC COVID-19 Impact Survey (August): Sri Lankan exporters are more positive in their outlook with expectations of moderate growth for export business and the economy over the next 12 months as the country rebounds back from the impact of COVID-19.

Policy Rates Remain unchanged in October: The CBSL decided to maintain their policy rates continuing their accommodative stance.

Remittances Inflows Resilient: Workers’ Remittances inflows have seen higher monthly figures from June to September 2020 compared to the same period in 2019. For the first nine months of 2020, inflows are up 2.4% compared to 2019. 

 

Global Economy

Global Growth Projections of IMF Revised Upward to -4.4% in 2020: Global growth projections by the IMF has been revised upward to -4.4%, from its forecasts in June 2020 and this upward revision reflects better-than-expected Q2 growth outturns, mostly in advanced economies.

Global Trade Shows Signs of Rebound from COVID-19, Recovery Still Uncertain- WTO: The global merchandise trade volume is expected to decline by 9.2% in 2020, followed by a 7.2% rise in 2021 and these estimates are subjected to an unusual high degree of uncertainty since they depend on the evolution of the pandemic and government responses to it. 

 

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Research Analyst - Economic Intelligence Unit, The Ceylon Chamber of Commerce

Saumya Amarasiriwardane

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