Connect with us

Hi, what are you looking for?

COURTESY

Kenya

Sri Lanka declares worst economic downturn in 73 years

COLOMBO, Sri Lanka, May 2 – Sri Lanka announced Friday that its economy shrank 3.6 percent last year due to the Covid-19 pandemic, making it the worst downturn since independence from Britain in 1948.

The unprecedented recession compared with a 2.3 percent GDP growth in 2019, the Central Bank of Sri Lanka said in its annual report for 2020.

It hoped the economy would rebound in 2021 and record an optimistic six percent growth on the back of improved local manufacturing and services.

“The pandemic has also offered an opportunity to reset the economy’s focus and to address longstanding structural weaknesses and establish a production-based, productivity-driven economy,” the bank said.

The pandemic hit the island’s lucrative tourism sector while sharp contractions were seen in construction, manufacturing as well as in services, the bank said.

It said the central government’s debt also rose to 101 percent of GDP last year, up from 86.8 percent of GDP in the previous year, underscoring the debt crisis faced by the South Asian nation.

International rating agencies have expressed fears for Sri Lanka’s ability to service its huge foreign debt as the country’s foreign reserves fell sharply in the past year.

The island’s economy was trying to recover from the effects of the 2019 Easter Sunday bombings that killed 279 people when the pandemic hit in early 2020.

Two weeks ago, Sri Lanka secured a $500 million loan from China to shore up its foreign exchange reserves as the local currency came under intense pressure and fell to a record low.

Advertisement. Scroll to continue reading.

Chinese influence in the South Asian nation has been growing in recent years through loans and projects under its vast Belt and Road infrastructure initiative, raising concerns among regional powers and Western nations.

Between 2005 and 2015, Colombo borrowed billions from China, accumulating a mountain of debt for expensive infrastructure projects.

Sri Lanka was forced to hand over its strategic Hambantota port on a 99-year lease to a Chinese company in 2017 after it was unable to service the $1.4 billion debt from Beijing used to build it.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...