COLOMBO, June 17 — Sri Lanka on Monday hailed data showing the economy grew far more than expected in the first quarter, as the country continued its recovery from a crippling foreign exchange crisis.

The 5.3 per cent expansion in January-March marked an increase from the previous three months and was a huge improvement on the 10.7 per cent contraction in the same quarter last year.

It also topped forecasts of 4.0 per cent in a survey by Bloomberg News.

Deputy finance minister Ranjith Siyambalapitiya said the government expected overall annual growth in 2024 to be about 2.2 per cent.

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“It is remarkable that we were able to achieve positive growth two years after facing the worst economic crisis ever,” he said in a statement.

Official figures showed a sharp recovery in the industrial sector, with an expansion of 11.8 per cent in the first quarter, compared with a 24.3 per cent contraction in January-March 2023.

The construction sector also showed improvement, as inflation came off a peak of 70 per cent in September 2022 to 0.9 per cent in May.

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Last week, the International Monetary Fund released US$336 million as part of a four-year US$2.9 billion bailout for Sri Lanka, which defaulted on its US$46 billion foreign debt in April 2022.

The peak of the economic crisis in 2022 saw months of food, fuel and medicine shortages after the island ran out of foreign exchange to pay for imports.

The resulting civil unrest forced the ouster of then-president Gotabaya Rajapaksa, when protesters stormed his residence.

His successor Ranil Wickremesinghe has doubled taxes, withdrawn generous energy subsidies and raised prices of essentials to shore up state revenue. — AFP