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Sri Lanka’s industrial production shows some sign of an uptake in December

The Gotabaya administration in Sri Lanka gets some breather as IIP in December shows a slight uptake

Sri Lanka’s industrial production in December has shown some signs of revival. Official data indicated that the country’s Index of Industrial Production (IIP)- an indicator of the manufacturing activities—stood at 107.4 index points, up from 106.2 in November. However, this was still significantly lower than 119.6 index points recorded in March when economic activities were showing healthy recovery. The index was also lower when compared to the year ago period. In December 2020 the IIP was at 110.3 index points.

“Sri Lanka could risk its industrial sector momentum, if the authorities fail to arrest the prevailing foreign exchange shortage, as it could spill into the intermediate imports, which form an integral part of making goods,” Daily Mirror Online said, adding that the island nation had its highest merchandise imports in 2021 after three years, with the total bill reaching $ 20.6 billion, up 28.5 per cent to $ 4.6 billion.

Also read: Indian tourists flock to Sri Lanka, as Colombo resumes visa on arrival facility

Sri Lankan economy is currently facing the twin challenge of fast eroding foreign exchange reserves and surging inflation. Sri Lanka’s President Gotabaya Rajapaksa declared a state of economic emergency in September last year.

Meanwhile, Sri Lanka’s Finance Minister Basil Rajapaksa is expected to pay another visit to India in the next couple of weeks to finalise the economic relief package. India has already extended assistance which includes a $500 million-Line of Credit (LOC) to Colombo.