ADB expects SL economy to contract 6.1% this year

Sri Lanka’s gross domestic product (GDP) growth is forecast to contract 6.1% this year and grow 4.1% in 2021, the ADB said in a supplement to its Asian Development Outlook (ADO).

Countries in ‘Developing Asia’ will ‘barely grow’ in 2020, the ADB forecast.

According to the ADB report, Afghanistan, Maldives, and Sri Lanka will bear the full impact of COVID-19 in the 2020 calendar year, with their economies expected to contract significantly.

“Sri Lanka’s forecast for 2020 is downgraded to contraction by 6.1%, with stringent domestic lockdown measures and the global spillover from COVID-19 assumed to have pummeled economic activity in the second quarter,” the ADB stated.

“If the pandemic dissipates in 2021, these three economies are set to rebound to growth by 3.0% in Afghanistan, 13.7% in Maldives, and 4.1% in Sri Lanka,” it added.

However,” Maldives’ recovery is expected to be particularly strong as its high-end tourist clientele have been less affected by the pandemic,” it said.

South Asia

With the impact of Covid-19, the economic outlook is grim for South Asian nations. After the introduction of lockdowns in late March, economic activity in South Asia has stalled.

For the FY21, a 3% GDP is forecast for Afghanistan followed by Bhutan 1.7%, India 5%, Nepal 3.1%, Pakistan 2% and Sri Lanka 4.1%.

On top of that, a 13.7% GDP growth is projected for Maldives as its recovery is expected to be particularly strong as its high-end tourist clientele have been less affected by the pandemic.

For the countries in Developing Asia, ADB forecasts growth of 0.1% in 2020. This is down from the 2.2% forecast in April and would be the slowest growth for the region since 1961.

“Growth in 2021 is expected to rise to 6.2%, as forecast in April. Gross domestic product (GDP) levels in 2021 will remain below what had been envisioned and below pre-crisis trends.” the ADB stated.

‘Developing Asia’ refers to a group of over 40 countries that are members of the ADB.