The tragic Easter bombings in Sri Lanka will effect in lower economic growth this year and could increase external financing pressures, Fitch Ratings said in their latest update, but specified such pressures were eased by the Government’s continued devotion to economic policies that have enabled Sri Lanka to get its International Monetary Fund (IMF) program back on track.
Last month’s bombings, which directed major hotels in Colombo as well as churches, will main to a reduction in tourism revenues, which had risen steadily in recent years to USD 4 billion in 2018, or about 5% of Fitch-estimated GDP, Fitch said.
The Government had predicted a further rise to USD 5 billion this year. In reply to the bombings, it now plans to launch an extensive tourism promotion campaign, alongside efforts to support the sector that could apparently include VAT slashes and subsidies.
Fitch also considers there will also be a significant effect on the current account deficit. Tourism provided nearly half of last year’s services incomes ($8.4 billion) and the Sri Lankan authorities estimate that the current account deficit could broaden to 2.7-2.8% of GDP in 2019, compared with their earlier forecast of 2.3%.