Tourism, Factory Restarts Temper Sri Lanka Economic Contraction - Bloomberg

Bloomberg reported that Sri Lanka’s economy likely shrank at a slower pace last quarter as a rebound in tourism and some industrial activity were the bright spots in a country grappling with still-elevated borrowing costs and higher taxes.

Acording to a median estimate of economists in a Bloomberg survey the gross domestic product probably contracted 8.9% in the three months to March from a year ago.

That’s better than a 12.4% contraction in the previous quarter, the most in two years.

Inflation has cooled for four straight months as a result, giving the monetary authority the space to unexpectedly cut its benchmark rate in June for the first time since July 2020 to support the nation’s recovery.

Sri Lanka’s currency is one of the best performers so far this year with the influx of tourists and still-elevated interest rates, but this may not be enough.