Inflation at single digit in 2013
Sri Lanka's economy rebounded recording 7.3 percen t growth in 2013,
while inflation remained at single digit levels for the fifth
consecutive year, gradually declining to mid-single digit levels by end
of 2013.
Economic growth was broad based with positive contributions from all
sectors, supported by favourable weather conditions and improved global
demand.
With the steady rise in economic growth, GDP per capita income rose
to US $ 3,280 in 2013. In spite of cost reflective upward adjustments to
domestic energy prices, prudent monetary management and improved
domestic food supply led to a gradual decline in headline inflation
while core inflation moderated to its lowest level.
Monetary aggregates decelerated towards desired levels by end 2013,
while the lagged effect of the previous year’s tight monetary policy
measures and the steep decline in gold backed loans lowered credit
disbursements to the private sector.
Low inflation enabled the Central Bank to ease monetary policy
further to facilitate economic growth.
The improvement in the trade account and higher receipts from
workers’ remittances and trade in services, with increased inflows to
the financial account as a result of improved investor confidence
resulted in a significant improvement in the balance of payments (BOP)
enabling a build up of foreign reserves and supporting exchange rate
stability. Continued commitment of the government to fiscal
consolidation resulted in a further reduction in the fiscal deficit and
debt to GDP ratio during the year. The financial sector remained sound
and resilient amidst uncertainties that increased volatility in the
global financial markets during 2013.
The realisation of the objectives of the macroeconomic policy package
that was adopted in 2012 coupled with favourable inflation outcomes and
expectations, allowed the Central Bank to ease monetary policy further
during the year. |