Sri Lanka’s economy has shown a “fair bit of resilience,” with its key tourism sector bouncing back following the devastating Easter Sunday bombings, said a senior executive — despite predictions that growth would be hit this year.
The South Asian country’s economy is in “decent shape” fundamentally, said Gihan Cooray, deputy chairman and group finance director at John Keells Group, Sri Lanka’s second largest listed company by market capitalization.
“The economy has shown a fair bit of resilience post the incident in April. We’ve seen sort of consumer sentiment being relatively strong … the fundamentals of the economy are in decent shape,” he told CNBC’s “Squawk Box” on Tuesday.
In April, bomb blasts ripped through churches and hotels in Sri Lanka on Easter Sunday, killing more than 200 people and injuring more than 400.
Analysts as well as the Sri Lankan government had predicted the bombings would hit the country’s growth this year. Sri Lankan State Minister of Finance Eran Wickramaratne had said 2019 growth “would be around 3%” —lower than projections by institutions such as the International Monetary Fund and the Asian Development Bank.
The IMF’s 2019 growth forecast for Sri Lanka was 3.5%, while that of the ADB was 3.6%.
In May, a Reuters poll showed that the country’s 2019 gross domestic product (GDP) growth could hit an 18-year-low following the bombings, falling to 2.5%. The attacks weighed on tourism, foreign investment, and business activity in the country.
Since then, Sri Lanka’s central bank has cut its rates twice in a bid to lift its struggling economy in the wake of the attacks.
Sri Lanka’s tourism on the mend
Sri Lanka’s key tourism sector is seeing “quite a good recovery” after the attacks, said Cooray.
“Month on month we’re seeing quite a strong rise in the arrivals and … we’ve been monitoring the forward bookings compared to, say, the same period last year. We’re happy to see that the trend of forward bookings is actually quite positive,” he said. “We’re seeing almost the same level of bookings from the period September to March 2020, so the recovery momentum is certainly quite strong, given the incident that happened.”
Tourism accounted for about 5% of the Sri Lankan economy in December 2018. In that month, tourism revenue stood at $475.2 million.
A signage for Hambantota Port in Hambantota, Sri Lanka, on March 28, 2018.
Atul Loke | Bloomberg | Getty Images
The upcoming presidential elections this year could also lead to more good news for Sri Lanka’s economy, Cooray said.
“Post the election, with further clarity on certain policies and large ticket investments, I think that could be a further catalyst for growth going forward,” he said.
Sri Lanka’s Hambantota International Port, located in Colombo, could attract more foreign investments as well, Cooray added.
“There’s 15,000 acres of land that has been earmarked for development of industries surrounding the port, and I think that is the opportunity that is there for the private sector in Sri Lanka to capitalize … it’s something that could be used to attract (foreign direct investment) into the country,” said Cooray. His company is a big player in the development of the port, a partnership between the Sri Lanka Ports Authority and China Merchant Port Holdings.