- Economic Growth Fell Short of Projections
The Sri Lankan economy grew by 4.8%, much lower than the 7% growth projected for 2015 and marginally lower than the 4.9% growth recorded in 2014.
- Consumption Driven Growth, Lower Savings
2015 recorded the lowest domestic savings ratio (22.6%) for the last four years, as the increase in disposable income was largely utilised for consumption expenditure. Private consumption grew by 6.9% in real terms (YoY), driven by low interest rates, relatively low inflation, and fiscal stimulus effects of the January 2015 Interim Budget.
- Core inflation Edged Up
Core inflation (Core-CCPI) edged up driven by rising aggregate demand, partly attributed to real wage inflation in the public sector (a sharp 27% YoY). General inflation remained below mid single digit level.
- Top 3 Exports Contracted Sharply
While exports contracted by 5.4% in 2015, Sri Lanka’s top 3 export products of Apparel, Tea and Rubber (accounting for a share of 66%) cumulatively contributed for 86% of this decline.
- Budget Deficit Rose Sharply
Last year saw poor performance in terms of fiscal consolidation, with a significant increase of the fiscal deficit (as a % of the GDP) from the budgeted 4.4% to 7.4%.