The International Monetary Fund (IMF) says despite the early signs of stabilization, Sri Lanka’s full economic recovery is not yet assured.

Daniel Leigh, IMF Research Department’s Division Chief made this remark during the press briefing on World Economic Outlook for October 2023 on Tuesday (Oct. 10).

He said Sri Lanka’s growth momentum remained subdued, with real GDP (gross domestic production) in the second quarter contracting by 3.1% on a year-on-year basis and high-frequency economic indicators continuing to provide mixed signals.

Thus, Mr. Leigh highlighted that Sri Lanka continuing with the reforms is critical to put the economy on a path towards a lasting recovery, and stable and inclusive growth.

He also commended the people of Sri Lanka for showing ‘remarkable resilience’. “In the face of enormous challenges, Sri Lanka has made commendable progress in implementing difficult but much-needed reforms.

These reforms are already bearing fruit, as the economy is showing tentative signs of stabilization, Mr. Leigh pointed out. “Inflation is down from a peak of about 70 percent a year ago, in September 2022, down to below 2 percent in September 2023. Gross international reserves have increased. And shortages of essentials have eased.”

The press briefing was held on the margins of the Annual Meetings of the World Bank Group (WBG) and the IMF, which are taking place in Marrakech, Morocco this year. The Boards of Governors of the IMF and the WBG usually meet once a year to discuss the work of their respective institutions. The meetings bring together central bankers, ministers of finance and development, private sector executives, civil society, media and academics to discuss issues of global concern, including the world economic outlook, global financial stability, poverty eradication, inclusive economic growth and job creation, climate change, and others.

According to IMF’s World Economic Outlook report released on Tuesday (Oct. 10), world economic growth has slowed and recovery is marked by important divergences between advanced economies and emerging markets and developing economies.

“The global economy is limping along, not sprinting,” Pierre-Olivier Gourinchas, the IMF’s economic counselor and the director of the Research Department, told the press briefing on Tuesday.

Gourinchas said the global economic growth is projected to slow from 3.5% in 2022 to 3% this year and 2.9% next year, a 0.1 percentage point downgrade for 2024 from July’s previous projections. Global inflation is forecast to decline steadily, from 8.7% in 2022 to 6.9% in 2023 and 5.8% in 2024.