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Sri Lanka’s economy shrank 3.1% in Q2 amid financial crisis

September 15, 2023


Sri Lanka’s economy shrank 3.1% in the April-June quarter, official data showed on Friday, as the country struggles to claw out of its worst financial crisis in decades.

The downturn was driven by high inflation, a depreciating currency and lower purchasing power, the Census and Statistics Department said in a statement.

The agriculture sector grew 3.6% from a year earlier, but output from industries contracted 11.5% and services dropped 0.8%, the department said.

Sri Lanka’s central bank projects that gross domestic product (GDP) will shrink by 2% this year, having contracted 7.8% in 2022, after the island’s economy fell into a severe foreign exchange crisis that decimated growth.