The World Bank projects Sri Lanka’s economy to contract by 3.2% this year and remain flat at zero percent next year.
“In Sri Lanka, the combination of falling tourism, manufacturing activity and services associated with the pandemic is envisaged to cause output to contract by 3.2 percent, despite the earlier recovery from the April 2019 terrorist attacks,” the World Bank said in the latest edition of the Global Economic Prospect.
The World Bank specifically stated that the impact on the tourism industry would create a challenging path for certain South Asian economies such as Sri Lanka, for their recovery.
“Tourism activity was on a path to recovery but became severely damaged by the pandemic. This includes sharp declines in tourist arrivals in economies like Bhutan, Nepal, Sri Lanka and especially Maldives, where tourism directly and indirectly accounts for more than two-thirds of GDP.”
“This includes a decline in arrivals from China, a key market, since early in the year. International travel bans and other restrictions adopted by regional economies (e.g., airport closure for arrivals in Sri Lanka) have further contributed to the weakness in tourism,” The World Bank said.
The World Bank recently stated that the global economy will witness the worst depression since the Second World War. “The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction,” the World Bank said in its report. “The global economy will shrink by 5.2% this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870.”
For South Asia, the regional economy is projected to contract by 2.7% this year, as the pandemic mitigation measures hinder consumption and services activity and as uncertainty about the course of the pandemic chills private investment.
The World Bank expects the South Asian region economies to return to growth path, projecting a 2.8% GDP growth for next year, although risks remain.