WB upgrades Sri Lanka’s growth outlook to 2.2% in ’24

The World Bank (WB) upgraded its forecast for Sri Lanka’s economy, predicting 2.2 per cent growth in 2024 as the nation recovers swiftly from a severe financial crisis, as reported by Reuters on Tuesday.

Sri Lanka received a $2.9 billion IMF bailout in March 2021, aiding in stabilising the economy and rebuilding reserves after a 2022 collapse.

The IMF programme helped the economy stabilse, with a projected return to growth in 2023 after a 2.3 per cent contraction.

The World Bank raised its growth forecast for Sri Lanka by 50 basis points, expecting real GDP growth to reach 2.5 per cent in 2025.

The country faces challenges with poverty rates remaining above 22 per cent until 2026, impacted by high inflation and economic losses.

Sri Lanka is in the process of restructuring its debt with China, India, and the Paris Club nations, a crucial step for its IMF bailout.

Downside risks persist due to limited reserves and policy challenges, especially with upcoming elections.

South Asia, excluding Afghanistan, is expected to grow by 6.1 per cent in 2025, with India leading at 6.6 per cent growth for fiscal year 2025. Pakistan’s growth is projected at 1.8 per cent for fiscal year 2024 and 2.3 per cent for fiscal year 2025.