CBSL expects GDP growth to pick up pace in Q4 2020

Sri Lanka is expecting a contraction of gross domestic product (GDP) in the second quarter of 2020 and a rebound in the fourth quarter of the year, Chandranath Amarasekara, Director of Economic Research at the Central Bank stated.

“In the first quarter of the year, we didn’t expect a contraction at all. The economic activities were affected only for a short period of time in the first quarter. But, the official GDP estimates come from the Department of Census and Statistics (DCS) and they have come up with 1.6% contraction in the first quarter. So, compared to that in the second quarter the contraction should be higher. Within the next one month DCS should publish the second-quarter GDP growth rates and what we see is that in order to catch up with the contraction in the first and second quarters there has to be a substantial pickup in growth in the fourth quarter. In the third quarter, we don’t expect much of a pickup but in the fourth quarter, we need a substantial pickup to correct the contraction in the first two quarters,” Amarasekara stated.

Meanwhile, Senior Deputy Governor of the Central Bank Dr. Nandalal Weerasinghe also expressed the following in this regard.

“Earlier our projection was 1.5% plus. For us to reach at least 0% we need a significant growth rebound in the fourth quarter. It is too early for us to come up with a number. But most likely if we achieve a higher growth in the fourth quarter and little lower position growth in Q3 then obviously we will be reaching at least zero growth for 2020 under those assumptions. These are not targets, these are our projections based on actual data.”