Sri Lanka expects 8.0-pct growth, 5.2-pct budget deficit in 2014

Nov 21, 2013 (LBO) – Sri Lanka is expected to grow 8.0 percent in 2014 with inflation of less than 6 percent and the budget deficit is expected to be brought down to 5.2 percent of gross domestic product, the Central Bank has said. Global commodity prices have however softened in recent weeks, with coffee prices slumping though tea prices are still stable.

Some analysts say a withdrawal of quantity easing which may lead to a strengthening of the US dollar could also weaken dollar prices of commodities.

The central bank said inflation is expected to be kept at below 6.0 percent in 2014 on point to point basis as well as annual average levels.

“However, a rebound in the growth of credit aggregates without a commensurate decline in credit to the public sector, and the possible strengthening of global commodity prices, aided by a gradual increase in global growth continue to pose upside risks to inflation in the period ahead,” the Central Bank said.

“The recovery in the global economy, continued expansion of domestic economic activity and the impact of growth oriented policy measures adopted in 2013 are expected to accelerate economic growth in 2014,” the Central Bank said in a report released ahead of the budget.