The Sri Lankan economy faced heightened challenges in 2018, emanating mainly from the global economic, financial and geo-political developments that adversely affected the external sector. There were also several domestic challenges. Political uncertainties, especially during the last quarter of the year, amplified challenges to overall macroeconomic stability. Sub-par economic growth continued in 2018 following subdued growth in 2017. Favourable weather conditions supported a rebound in the agriculture sector while the expansion in services activities has been broad-based.
However, industrial activities slowed in 2018 mainly due to the slowdown in the construction sector. Consumer price inflation remained low in 2018 in spite of temporary ups and downs due to volatile food prices and administrative price adjustments. In response to the tight monetary policy stance pursued by the Central Bank in the past two years, monetary and credit growth decelerated in 2018 from the higher levels observed in 2016 and 2017. An adequate expansion in domestic credit flows driven by demand from the private sector was witnessed during the year.
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However, industrial activities slowed in 2018 mainly due to the slowdown in the construction sector. Consumer price inflation remained low in 2018 in spite of temporary ups and downs due to volatile food prices and administrative price adjustments. In response to the tight monetary policy stance pursued by the Central Bank in the past two years, monetary and credit growth decelerated in 2018 from the higher levels observed in 2016 and 2017. An adequate expansion in domestic credit flows driven by demand from the private sector was witnessed during the year.
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