Sri Lanka's economy shrinks by 11.5% in first quarter amid financial crisis

Sri Lanka's economy shrank 11.5% in first quarter of 2023 from the previous year, government data showed on Thursday, even as the cash-strapped island nation struggles to overcome the economic crisis.

Sri Lanka's economy shrank 11.5 per cent in the first quarter of 2023 from the previous year, government data showed on Thursday, even as the cash-strapped island nation struggles to overcome the economic crisis.

Sri Lanka is currently facing the worst economic crisis in the history of the island nation.

The GDP for the first quarter of 2023 at the constant price has declined to Rs 3,114,187 million from Rs 3,519,400 million in the first quarter of 2022. The year-on-year GDP growth for the first quarter of the year 2023 has been reported as 11.5 per cent of negative growth rate, the statistics department said in a statement.

 

While the agricultural sector had expanded by 0.8 per cent, the industry and service sectors had declined by 23.4 per cent and 5 per cent respectively during this quarter, it added.

In 2022, the economy had contracted by over 7 per cent as the economic difficulties forced people to take to the streets with protests across the island nations that also led to the ouster of Sri Lanka's powerful Rajapaksa family from politics.

In March, an agreement was struck with the International Monetary Fund (IMF) for a nearly USD 3 billion bailout pending debt restructuring with creditors.

Until the IMF facility, the island's economy was assisted by an aid package of USD 4 billion from India.

The Indian credit lines for fuel and essential imports provided relief to the public protesting against the government for its mishandling of the nation's economy.