Sri Lanka's real GDP is projected to have grown by around 5.0% in 2024, registering the highest annual growth since 2017, the Central Bank said launching its Policy Agenda for 2025.
This higher-than-expected growth also provides evidence that deflation in recent months was not due to demand factors but mainly due to supply-side factors, including administrative price adjustments.
During the first three quarters of 2024, the economy is estimated to have grown notably by 5.2% with key economic sectors recording expansions.
Building on the momentum in economic activity, leading economic indicators of industry and service sectors reflect a continuation of the expansion in output in the last quarter of 2024 as well.
Inflation declined steadily throughout 2024 and eventually reached deflationary levels towards the latter part of the year.
With the notable deceleration of headline inflation and subsequent deflation, the inflation target was breached from the lower margin for two consecutive quarters in the second and third quarters of 2024. Such inflation target-miss continued in the final quarter of 2024 as well.
Meanwhile, the Gross official reserves increased to around US dollars 6.1 billion by the end of 2024 compared to US dollars 4.4 billion at end 2023.
The Central Bank purchased the highest-ever annual amount of foreign exchange from the domestic foreign exchange market in 2024, exceeding US dollars 2.8 billion (net).