Country Report Sri Lanka March 2011

Outlook for 2011-15: External sector

In the forecast period both imports and exports of goods will grow rapidly. However, as imports will start from a higher base and will maintain a faster rate of expansion in nominal terms, the merchandise trade deficit will widen considerably, from an estimated US$4bn in 2010 to US$8.4bn by 2015. Services exports will be boosted by booming tourism inflows, the development of the business-process outsourcing sector, and higher income from trade and shipping services (partly owing to the opening of new port facilities). In addition, transfers income from remittances by Sri Lankans working abroad should grow healthily in 2011-15. These expanding sources of foreign exchange should help to keep the current-account deficit smaller than 5% of GDP throughout the forecast period.

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