Oct 14, 2019 (LBO) – Earnings of Sri Lanka’s main commercial port in Colombo is to be affected by the slowdown of the Indian economy, the Central Bank Governor Indrajit Coomaraswamy said.
India’s economic growth slumped to a six-year low of 5 percent in the April-June quarter and, according to the Reserve Bank of India (RBI), is likely to be near this trough at 5.3 percent in the July-September quarter.
The central bank of India had cut the country’s growth forecast for FY20 to 6.1 percent from 6.8 percent estimated earlier indicating tougher times ahead.
In her first speech as managing director of IMF, Kristalina Georgieva said 90 percent of the world is likely to have slower growth in 2019, signalling out India along with Brazil.
“In recent months there has been some decline in earnings from shipping because the Indian economy has slowed down in the last couple of quarters,” the Central Bank Governor said.
“As almost 75 – 80 percent of the tonnage handled by Colombo harbour is Indian transshipment, so that is having an impact on our shipping.”
Container transshipment volumes at Colombo Port in Sri Lanka contracted 2.9 percent in July 2019 from a year earlier to 465,953 twenty-foot equivalent units (TEUs), as India’s imports and exports shrank.
Total container volumes in Colombo dropped 2.6 percent in July 2019 from a year earlier to 585,379 TEUs.
“That’s why the performance of the services account somewhat adversely affected,” Coomaraswamy explained.
“But overall the current account deficit which was 3.2 percent of GDP last year is projected to come down to 2.6 percent.”