Sri Lanka crisis: Central bank lays out extent of economic problems

Sri Lanka's central bank has laid out the extent of the country's worst economic crisis in more than 70 years.

In its annual report, the bank outlined how last year wages failed to keep up with the soaring cost of everything from food to fuel.

"Several inherent weaknesses" and "policy lapses" helped to trigger the severe economic problems that engulfed the South Asian nation, the bank says.

The bank now expects the economy to return to growth next year.

The Central Bank of Sri Lanka forecast the economy will shrink by 2% this year, but expand by 3.3% in 2024.

The prediction is more optimistic than the International Monetary Fund (IMF), which forecast a contraction in 2023 of around 3% and growth of 1.5% next year.

The central bank's report also outlined how headline inflation reached almost 70% in September as prices of fresh fruit, wheat and eggs more than doubled.

At the same time the cost of transportation and essential utilities such as electricity and water rose even faster.