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Foreign RRL Studies

Inflation is negatively impacting Sri Lanka's economic growth. Sri Lanka experienced its highest inflation rate of 12.1% in December 2021 due to factors like currency devaluation, rising oil prices, excessive money printing, and declining agricultural production. While inflation fluctuated between 6.18-5.92% from 2001-2021, economic growth declined sharply from 6% in 2000 to -3.57% in 2021, showing that high inflation is slowing Sri Lanka's ability to increase its economic growth.

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Rica Mae Dacoylo
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29 views

Foreign RRL Studies

Inflation is negatively impacting Sri Lanka's economic growth. Sri Lanka experienced its highest inflation rate of 12.1% in December 2021 due to factors like currency devaluation, rising oil prices, excessive money printing, and declining agricultural production. While inflation fluctuated between 6.18-5.92% from 2001-2021, economic growth declined sharply from 6% in 2000 to -3.57% in 2021, showing that high inflation is slowing Sri Lanka's ability to increase its economic growth.

Uploaded by

Rica Mae Dacoylo
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Inflation Impacting Economic Growth

Related Studies
According to Mensah, Allotey, the goal of basic macroeconomics is to achieve
sustainable economic growth by maintaining a low inflation. However, Sri Lanka
has a perpetuation of low per capita income and high inflation. Based on the
studies, after the end of civil war in Sri Lanka for the period 2008 and 2009, the
highest inflation rate reported was on December 2021, reportedly with a rate of
12.1%.
This rising inflation was due to decrease of Sri Lankan Rupees, cost-push inflation
due to rising oil prices, excessive printing of money by the Central Bank of Sri
Lanka, as well as increase in prices of goods and services.
Additionally, agriculture production was also declined because of the halted
cultivation by the farmers for not achieving the expected harvest.
According to the CBSL, in 2001 and 2021 Sri Lanka’s inflation rate remained at
6.18% and 5.92%, it shows that the country’s inflation has been rising and falling
on the given span of time. Sri Lanka’s economic growth rate of 6% in the year
2000 declined to -3.57% in the year 2021. It reveals that its economic growth has
been significantly negative. The study investigates how Sri Lanka is slow to rising
its economic growth

Atigala, P., Maduwanthi, T., Gunathilake, V., Sathsarani, S., & Jayathilaka, R.
(2022). Driving the pulse of the economy or the dilution effect: Inflation impacting
economic growth. PloS one, 17(8), e0273379.
https://doi.org/10.1371/journal.pone.0273379
The impact of inflation on the financial
sector development: Empirical evidence
from Jordan

In any economy, the financial sector plays a fundamentally important role in


achieving economic growth and thus achieving sustainable economic
development. Therefore, interest in this sector and the improvement of its
performance is considered a strategic goal for any country. Accordingly, this study
aims to analyze the short- and long-run impacts of inflation on the development
of this sector on the Jordanian economy for the period from 1993 to 2018. To do
so, the study uses an auto-regressive distributed lag bound testing approach,
which is considered an advanced analytical model. Empirical findings confirmed
that there is a statistically significant long- and short-run negative effect of
inflation on financial sector development. On the contrary, there is a statistical
significant long- and short-run positive impact of economic growth on financial
sector performance. In addition, results confirmed that there is a positive support
of the previous financial sector policies on financial sector performance in the
current period.

Khaled, b., Wasfi al S., Mohammad Q.M M. (2021, September 2) The impact of
inflation on the financial sector development: Empirical evidence from Jordan.
https://www.tandfonline.com/doi/full/10.1080/23322039.2021.1970869?
fbclid=IwAR1x_MR68rhLfR0VzMJYBDGLb7qEI9sVeV4LwOzJ6m3I6j3vunhjQlcHNpw

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