COLOMBO, April 7 (Xinhua) -- Heightened global geopolitical uncertainties, particularly newly-announced U.S. tariffs and their spillover effects, could weigh on Sri Lanka's external sector and broader economic outlook, the central bank said Monday.

In its annual economic review, the central bank stated that the country's economy continued to recover in 2024 following an economic downturn two years ago, and emphasized the compelling need for continued prudence in policymaking and further strengthening of external and fiscal buffers.

It noted that post-crisis reforms have begun to yield positive outcomes, with signs of improved economic activity, a partial recovery in purchasing power, and reduced uncertainty becoming evident.

Earlier in the day, Central Bank Governor Nandalal Weerasinghe presented a copy of the report to President Anura Kumara Dissanayake.

The annual economic review also noted that election-related uncertainties had dissipated toward the latter part of 2024, as signs of reform program continuity and policy consistency emerged.

This, along with the near-completion of external debt restructuring and the country's exit from a restricted default rating, has enhanced investor and stakeholder confidence.

In terms of economic growth, the central bank noted that inflation eased and the country entered a period of deflation beginning in September 2024, driven largely by energy price reductions.

The central bank added that the rupee appreciated under the flexible exchange rate policy, and the benefits of currency appreciation trickled down to consumers through lower import prices, though this had negative implications for foreign exchange earners.

Fiscal sector performance also improved notably in 2024, with the primary balance recording a surplus for the second consecutive year, according to the central bank. Enditem

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