Pursuits
Sri Lanka’s Quarterly Growth Slows Amid Interest Rate Increase
- Island’s 2Q GDP expands 2.6% y/y versus 4.9% median forecast
- Central Bank raised benchmark interest rates in July
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Sri Lanka’s gross domestic product expanded less than estimated in the previous quarter, even as central bank Governor Indrajit Coomaraswamy raised key interest rates in his first review in July.
The central bank’s tight rate bias is likely to further cloud the growth outlook even as government spending cuts, shrinking trade volumes and floods hurt economic activity. In his latest policy review on Aug. 30, Coomaraswamy said private sector credit remained higher than desired and measures adopted during the first seven months of 2016 will gradually slow expansion in bank lending and support a mid-single digit inflation target.