Sri Lanka will overcome concerns about deflation

Significance This is a major contrast to the double-digit inflation recorded in 2022 and much of 2023. Central Bank of Sri Lanka (CBSL) Governor Nandalal Weerasinghe said last month that deflation was a “correction” after previously high inflation and would therefore help, not harm, the economy. Nevertheless, some observers are warning of its potentially adverse effects. Impacts Since the president administers the finance portfolio, how the economy fares will substantially affect public opinion towards him. Keeping the IMF bailout programme on track will be among the government’s top priorities. The central bank will be under pressure to keep easing monetary policy.