Sri Lanka‘s economic growth is expected to grow at 5.3 percent in 2016 and 2017 driven by increased public investment and postponed investments in 2015, the World Bank says. 

“The challenging global environment has taken a toll on the economy with reduced exports and remittances; and significant capital outflows, leaving Sri Lanka with higher public debt, lower reserves and rising inflation,” the WB said in a statement.

Led by robust growth in India, South Asia shows resilience in the face of turbulent international markets and remains the fastest-growing region in the world, with economic growth forecasted to gradually accelerate from 7.1 percent in 2016 to 7.3 percent in 2017, a World Bank report said.

According to the twice-a-year South Asia Economic Focus, the region’s economic performance prospects remain strong due to its limited exposure to global turbulence, coupled with increasing investment activity.

However, there are also signs of fading tailwinds. Capital flows to the region have declined and remittances from oil exporting countries have started to weaken. Fuel and food prices remain low but are unlikely to keep falling. As a result overall output growth is slower than previously anticipated and inflation has recently been creeping up.

Many South Asian countries show potential for accelerated growth in the short to medium term. However, the tailwinds of high levels of remittances coupled with low oil prices may be slowing down so countries should be well prepared for a more difficult global environment.