CBSL Chief Explains Slow but Steady Economic Comeback

COLOMBO (News 1st); Central Bank of Sri Lanka (CBSL) Governor Dr. Nandalal Weerasinghe has outlined the country’s economic trajectory, highlighting a gradual recovery following sharp contractions in 2022 and 2023, while cautioning that income levels across the population have not yet fully rebounded.

Speaking on the country’s economic performance, the Governor noted that Sri Lanka experienced a severe downturn, with the economy contracting by around 7 percent in 2022 and a further decline of approximately 2 percent in 2023.

These developments, coupled with high inflation, significantly reduced public purchasing power during that period.

However, he pointed out that the economy has since moved into a recovery phase, recording growth of around 5 percent for two consecutive years after 2023.

According to Dr. Weerasinghe, this recovery has been gradual rather than immediate, reflecting the typical nature of post-crisis economic rebuilding.

He explained that while growth has resumed, improvements in purchasing power take time to materialise, as they gradually align with household expenditure patterns. Over the past three years, he noted, the cost of living has remained relatively stable, even as the economy has expanded.

Dr. Weerasinghe also highlighted that the overall size of the economy has increased in terms of Gross Domestic Product (GDP), reaching approximately USD 109 billion, indicating a return toward earlier economic levels.

Despite these positive indicators, the Governor acknowledged that the benefits of recovery have not been evenly distributed. He stressed that income growth has varied across different segments of society, with some individuals seeing stronger increases in earnings, while others continue to struggle to catch up.

This disparity, he said, is evident in the continued reliance on social welfare programmes such as Aswesuma, as well as the presence of a significant number of people still living below the poverty line.

Dr. Weerasinghe emphasised that addressing these gaps will take time, noting that uneven income recovery is a common feature of post-crisis economic transitions.