Sri Lanka’s gross official reserves remained at healthy levels by the end of February, with further improvements expected by the end of March following the receipt of the IMF-EFF tranche and significant foreign exchange purchases by the Central Bank.
The exchange rate, which appreciated by 10.7% in 2024, has recorded a 1.4% depreciation so far this year.
“We see continued improvement in earnings from tourism and workers’ remittances, which largely supports the external current account surplus. As of March 23, over 172,000 tourist arrivals have been recorded, with tourism earnings reaching approximately US$768 million in the first two months of 2025. Meanwhile, workers’ remittances have consistently remained above US$500 million for several months, totaling US$1.1 billion during January and February,” said Dr. S. Jegajeevan, Director of Economic Research at the Central Bank of Sri Lanka, on Wednesday (March 25).
She noted that headline inflation is expected to remain negative in the near term before turning positive by mid-2025, reaching the targeted level by year-end. Over the medium term, inflation is projected to stabilize at 5%.
Sri Lanka’s economy recorded robust growth of 5% in 2024 after two consecutive years of contraction. The expansion was driven by key sectors, including construction, accommodation, food and beverage manufacturing, and textiles and apparel.
“Leading indicators such as PMI manufacturing, PMI services, PMI construction, and the Index of Industrial Production suggest that the growth momentum is continuing into 2025,” Dr. Jegajeevan added.
