Students are required to prepare a report by including the following details: • Analyze the current economic data (Eg: GDP, Unemployment, Inflation etc.) of Sri Lanka. • Compare the recent economic performance (economic data) of Sri Lanka with one other country.

2. GROUP
NUMBER 07
FAST &
FURIOUS
STUDENT NUMBER NAME
1 2021/030 H.L.N.N.Liyanage
2 2021/067 G.N.N.Gamage
3 2021/118 K.D.D.P. Kumari
4 2021/172 D.G.U.S.Dasanayaka
5 2021/191 B.L.U. Nishshanka
6 2021/244 T.H.U.D. Thirimanne
7 2021/356 P.H.Kalpani
8 2021/439 F.A. Mikdham
9 2021/444 S.M. Liyanage
10 2021/514 B.G.N.U.Diyadahara
11 2021/526 D.S.C. Jayasingha
12 2021/593 K.D.T.P.Deshapriya
13 2021/613 K.H.R.K.Kathurusinghe

3. Malaysia is a country in Southeast Asia with a rich culture,
stunning natural beauty, and remarkable economic growth. It
is home to a diverse population, including Malays, Chinese,
Indians, and others.
Malaysia has a strong manufacturing sector, a flourishing
services industry, and a growing presence in technology and
innovation.
It is a hub for international trade and investment. Malaysia is
also a parliamentary democracy with a constitutional
monarchy. It has a vibrant political landscape and a strong
commitment to democratic principles.
In essence, Malaysia is a captivating country that embraces
diversity, celebrates its heritage, and continuously strives for a
brighter future.
Sri Lanka is an island nation in the Indian Ocean that is regarded as
the "Pearl of the Indian Ocean" because of its breathtaking natural
beauty. The Palk Strait divides Sri Lanka from the Indian Peninsula.
With a population of about 22 million, Sri Lanka is home to a
diverse range of cultures, languages, and ethnicities.
Sinhalese (74.9%), Sri Lankan Tamil (11.2%), Sri Lankan Moors
(9.2%), Indian Tamil (4.2%), and others (0.5%) make up its four
major ethnic groupings. Mr. Ranil Wickremasinghe is the president
of Sri Lanka at the moment.
In 1802, Sri Lanka was established as a British colony; it attained
independence in 1948 and joined the Commonwealth as a republic
in 1972.

4. This analysis includes how Sri lankan economy and malaysian economy fostered through the past economic conditions using
various strategies and consequences of them. This document provide insights for sri lanka through the analysis of malaysian policy
measures and strong strategies used in various scenarios in order to face economic challenges and Overcoming them.This analysis
uses main 5 variables of macro economic to measure both the country's efficiency in their policy making. Such as:
 GDP
 UNEMPLYMNT
 INFLATION
 INCOME DISTRIBUTION
 EXCHANGE RATES
The analysis spans from 2018/2019 to 2023, incorporating global factors, pandemic effects, inflation, exchange rates, education,
technology, remote work trends, government policies, sectorial analysis, and the impact of external shocks. Information is sourced
from reputable outlets, including websites and official reports from the Central Bank of Sri Lanka and the World Bank.

5. WHY MALAYSIA?
 Shared Historical Context: Both Sri Lanka and Malaysia gained independence from their
colonial powers in the 1950s, and they shared similar socio-economic conditions in the early
post-colonial era. This shared historical background provides a valuable context for
understanding the similarities and differences in their economic trajectories.
 Parallel Development Patterns: Despite their initial similarities, Malaysia has experienced
significantly higher economic growth and overall development compared to Sri Lanka. This
divergence offers valuable insights into the factors that have contributed to Malaysia's
success and the challenges faced by Sri Lanka.
 Diversified Economic Structures: Malaysia has successfully transitioned from a reliance
on primary commodity exports to a more diversified economy with a strong manufacturing
sector. This transformation showcases the ability of developing countries to diversify their
economies and achieve sustainable growth.
 Policy Choices and Institutional Frameworks: By examining the policy choices and
institutional frameworks adopted by both countries, we can gain insights into the factors that
have driven their economic performance. This comparative analysis can help identify best
practices and lessons learned for both nations.
 Regional Context and Bilateral Cooperation: Malaysia and Sri Lanka share geographic
proximity and cultural ties, making them natural partners for economic cooperation.
Comparing their economic performance can inform strategies for regional development and
enhance bilateral cooperation.

6. GROSS DOMESTIC PRODUCT (GDP)

7. 1. Sustainable Development:
Including sustainable practices, renewable energy, and sustainable resource management into economic planning to guarantee long-
term economic growth without jeopardizing the demands of future generations.
2. Infrastructure Development:
Infrastructure expenditures, encompassing utilities, transportation, and communication networks, have been essential.
These advancements increase national economic activity, promote investment, ease commerce, and improve connectivity.

8. 1. The concept of economic diversification:
Malaysia has concentrated on expanding its economy to include services, technology, and innovation in addition to more conventional
industries like manufacturing and agriculture.
By diversifying, we hope to foster sustainable growth and lessen our reliance on any one industry.
2. Infrastructure Development:
Infrastructure expenditures, encompassing utilities, transportation, and communication networks, have been essential.
These advancements increase national economic activity, promote investment, ease commerce, and improve connectivity.
3. Industrialization and Innovation:
Providing support for industrialization and innovation via programs like Industry 4.0 adoption and the National Transformation Progra
m
4.International Trade and Investment (FDI):
Malaysia's economic plan has placed a strong emphasis on entering trade agreements and luring in foreign investment.
Malaysia hopes to boost economic growth and increase its export competitiveness by engaging in international commerce and luring
foreign direct investment.

9. INFLATION
0
20
40
60
80
100
120
140
160
180
2019 2020 2021 2022
INFALTION RATES
CPI (2013=100) NCPI (2013=100)

10. some specific reasons for the changes in inflation rates in each country:
Sri Lanka Malaysia
• 2019 to 2020: The increase in inflation in Sri Lanka was
driven by an increase in government spending, an
expansionary monetary policy, and a depreciation of
the Sri Lankan rupee.
• 2020 to 2021: The continued high inflation in Sri Lanka
was driven by supply chain disruptions due to COVID-
19, an increase in global commodity prices, and
continued expansionary monetary policy.
• 2021 to 2022: The sharp increase in inflation in Sri
Lanka was driven by a sharp increase in global
commodity prices, a depreciation of the Sri Lankan
rupee, and continued expansionary monetary policy.
• 2022 to 2023: The decline in inflation in Sri Lanka was
driven by a tightening of monetary policy, a gradual
stabilization of the Sri Lankan rupee, and a base effect
from high inflation in 2022.
• 2019 to 2020: The slowdown in inflation in Malaysia was
driven by a slowdown in economic growth and
deflationary pressures due to the global economic
slowdown.
• 2020 to 2021: The increase in inflation in Malaysia was
driven by government stimulus measures, an increase in
global demand, and supply chain disruptions.
• 2021 to 2022: The continued high inflation in Malaysia
was driven by a strong economic recovery, an increase
in global commodity prices, and supply chain
disruptions.
• 2022 to 2023: The moderation of inflation in Malaysia is
expected to be driven by a gradual moderation of
economic growth, an easing of supply chain
disruptions, and a base effect from high inflation in
2022.

11. Sri Lanka has experienced a period of high inflation in recent years, with the annual inflation rate reaching a peak of 69.8%
in September 2022. The government has implemented a number of strategies to control inflation, including:
 Monetary policy: The Central Bank of Sri Lanka (CBSL) has raised interest rates significantly in an effort to reduce the
money supply and dampen inflationary pressures. This approach aims to make borrowing more expensive and reduce
demand for goods and services, thereby easing upward pressure on prices.
 Fiscal policy: The government has also implemented fiscal policies, such as cutting spending and increasing taxes, to
reduce the budget deficit and stabilize the economy. This approach aims to reduce government borrowing and
competition for resources in the economy, which can contribute to inflationary pressures.
 Supply-side measures: The government has also been focusing on boosting domestic production and reducing
reliance on imports, particularly for essential goods. This approach aims to address supply chain disruptions and
reduce price pressures stemming from external factors.
 Exchange rate management: The CBSL has intervened in the foreign exchange market to stabilize the rupee and
prevent sharp depreciations, which can fuel inflationary pressures. This approach aims to maintain purchasing power
and reduce the cost of imported goods.
 Price controls: In some cases, the government has implemented price controls on essential goods, such as certain
food items and fuel, to prevent excessive price increases. This approach aims to protect consumers and ensure that
basic necessities remain affordable.
 Public awareness campaigns: The government has also been conducting public awareness campaigns to educate
consumers about inflation and provide tips on managing their finances during this period. This approach aims to
empower individuals to make informed decisions and adapt their spending patterns to cope with rising prices

12.  Monetary policy: The Malaysian central bank, Bank Negara Malaysia (BNM), has been using monetary policy tools, such as raising
interest rates, to control the money supply and dampen inflationary pressures. This approach aims to make borrowing more
expensive and reduce demand for goods and services, thereby easing upward pressure on prices.
 Fiscal policy: The government has also been implementing fiscal policies, such as subsidies and targeted assistance programs, to
help mitigate the impact of inflation on vulnerable households. These measures aim to provide financial relief to those most
affected by rising prices and help maintain purchasing power.
 Supply-side measures: The government has also been focusing on boosting domestic production and reducing reliance on
imports, particularly for essential goods. This approach aims to address supply chain disruptions and reduce price pressures
stemming from external factors.
 Price controls: In some cases, the government has implemented price controls on essential goods, such as certain food items and
fuel, to prevent excessive price increases. This approach aims to protect consumers and ensure that basic necessities remain
affordable.
 Public awareness campaigns: The government has also been conducting public awareness campaigns to educate consumers
about inflation and provide tips on managing their finances during this period. This approach aims to empower individuals to
make informed decisions and adapt their spending patterns to cope with rising prices.

13. UNEMPLOYMENT
4.7
5.7 5.7
4.3
4.7
4.9
5.4
5.1
4.6
5.2
5.1
5.8
5.2
5
4.5
5.2
4.6
4.8
2019 2020 2021 2022 2023
UNEMPLOYMENT RATES
Q1 Q2 Q3 Q4
3.26
4.54
4.05
3.73
3.4
2019 2020 2021 2022 2023
UNEMPLOYMENT RATES
UNEMPLOYMENT RATES

14.  Address the economic crisis: The government is working to address the economic crisis by reducing debt, implementing
fiscal reforms, and attracting foreign investment. Addressing the economic crisis will help to create jobs and reduce
unemployment.
 Invest in education and training: Sri Lanka needs to invest more in education and training to increase the literacy rate and
the number of people with vocational and technical skills. This will help to make the workforce more competitive and
increase employment opportunities.
 Promote entrepreneurship: The government can promote entrepreneurship by providing loans, training, and other
support to small businesses. This will help to create new jobs and reduce unemployment.

15. The government has allocated RM4. 8 billion (US$1.1 billion) to generate 600,000 job opportunities under
Budget 2022. Finance minister Datuk Seri Tengku Zafrul Abdul Aziz said the government aims to reduce the
unemployment rate to be below 4% for 2022.
 Invest in education and training
 Creating jobs in technology and knowledge-intensive sectors
 Increasing trade
 Recognizing the importance of self-employment
 Increasing public-private sector partnerships

16. INCOME DISTRIBUTION
0.45
0.46
0.47
0.46
0.45
2018 2019 2020 2021 2022
Gini coefficient of the years
Sri Lanka
0.41
0.4 0.4 0.4 0.4
2018 2019 2020 2021 2022
Gini coefficient of the years
Malayzia

17.  Raising the minimum wage
The increase in the minimum wage has had a significant impact on the incomes of low-wage workers. In 2018, the average
monthly income of workers in the lowest 10% of the income distribution was Rs. 5,000. In 2022, the average monthly income
of workers in the lowest 10% of the income distribution was Rs. 7,000. This is an increase of 40%.
 Expanding social welfare programs
In 2018, Samurdhi provided financial assistance to over 1.5 million households in Sri Lanka. In 2022, the program provided
financial assistance to over 2 million households. This is an increase of 33%.
 Promoting gender equality
The increase in the female literacy rate and the female labor force participation rate has led to a decrease in the gender pay
gap in Sri Lanka. In 2018, women in Sri Lanka earned an average of 24% less than men for the same job. In 2022, women in Sri
Lanka earned an average of 20% less than men for the same job. This is a decrease of 4%.
 Improving education and skills training
The Sri Lankan government has increased investment in education and skills training by 15% from 2018 to 2022. This has
helped to improve the skills of the workforce and increase productivity.

18.  Raising the minimum wage
The increase in the minimum wage has had a significant impact on the incomes of low-wage workers. In 2018, the average
monthly income of workers in the lowest 10% of the income distribution was RM700. In 2022, the average monthly income
of workers in the lowest 10% of the income distribution was RM900. This is an increase of 29%.
 Expanding social welfare programs
The Malaysian government has expanded social welfare programs, such as BR1M, by 15% from 2018 to 2022. This has
helped to reduce poverty by 8%.
 Promoting gender equality
The Malaysian government has implemented a number of policies to promote gender equality, such as increasing access to
education and training for women by 8%. This has helped to reduce the gender pay gap by 4%.
 Improving education and skills training
The Malaysian government has increased investment in education and skills training by 12% from 2018 to 2022. This has
helped to improve the skills of the workforce and increase productivity.

19. EXCHANGE RATES

20. 1. Foreign Exchange Reserves Management:
Central banks may use their foreign exchange reserves to intervene in the currency markets. Buying or selling the national
currency can influence its value.
2. Interest Rate Policies:
Adjusting interest rates can impact the attractiveness of a currency. Higher interest rates may attract foreign capital,
increasing demand for the currency.
3. Managed Float or Dirty Float:
Allowing the currency to float in the open market while occasionally intervening to stabilize extreme fluctuations.
4. Exchange Rate Pegs:
Pegging the exchange rate to another major currency or a basket of currencies for stability.
5. Intervention in Currency Markets:
Direct intervention by buying or selling the national currency to influence its value.

21. 1. Foreign Exchange Reserves Management:
Central banks often maintain foreign exchange reserves to intervene in the currency markets. By buying or selling their own
currency, they can influence its value.
2. Exchange Rate Pegs:
Some countries opt for a fixed or pegged exchange rate system where the value of their currency is tied to another major
currency or a basket of currencies. This provides stability but requires active management.
3. Managed Float or Dirty Float:
In a managed or dirty float system, the currency is allowed to float in the open market, but the central bank may intervene
occasionally to stabilize extreme fluctuations.
4. Interest Rate Policies:
Central banks may use interest rate policies to influence exchange rates. Higher interest rates can attract foreign capital,
increasing demand for the currency and raising its value.
5. Capital Controls:
Some countries implement capital controls to regulate the flow of money across borders. This can help prevent speculative
attacks on the currency.

22. POLICY MEASURES USED BY SRI LANKA TO OVERCOME THE CRISIS
(DECEMBER 2019 - ID 2022)
1. Increased Government Spending: The government raised its spending significantly during this
period, aiming to stimulate economic activity.
2. Job Creation: Approximately 100,000 new jobs were generated, contributing to employment growth
and addressing economic challenges.
3. Tax Reduction: To encourage economic activity and boost spending, the government implemented
tax cuts, providing relief to businesses and individuals.
4. Central Bank Financing: To cover the deficit and manage domestic debt rollover, the government
relied on credit from the Central Bank. Low-Rate Bidding and Securities Purchase: The Central
Bank engaged in low-rate bidding and purchased government securities to support government
financing, leading to a decline in interest rates.
5. Monetary Base Expansion: The Central Bank significantly expanded the monetary base by 49%
between 2020 and 2022, injecting a substantial amount of money into the economy.
6. Debt Restructuring: Engaging in complex negotiations with creditors following a sovereign foreign
debt default in April, aiming to address the debt crisis

23. DISTRIBUTIONAL EFFECTS OF NEW MONEY IN THE ECONOMY
1. Gradual Impact: New money doesn't instantly affect all prices; it takes time to spread through the
economy.
2. Differential Price Changes: Everyday item prices may change faster, but not uniformly. Goods tied
to consumer demand see slower price rises
3. Raw Material Price Dynamics: Prices of raw materials may increase faster than factors of production
like land, assets, and labor.
4. Slow Changes in Fixed Contracts: Prices on fixed contracts, such as wages and rents, change slowly.
5. Gradual Spread: Over time, new money spreads, boosting demand and prices.
ALTERNATIVE CONSEQUENCES OF POLICY MEASURES IMPLEMENTED
1. Reduced Buying Power: Money's purchasing power decreased during 2020-2022.
2. Government Actions: To tackle issues like rising prices and currency problems, the government
used measures such as price controls, exchange rate regulations, and import controls.
3. Limited Success: Despite these efforts, problems persisted, and there was a growing gap between
official prices and actual conditions.
4. Phantom Stability: Increased money creation led to a situation where prices seemed stable, but
goods were scarce

24. Focus on Export-Oriented Manufacturing
Invest in Human Capital Development
Promote Entrepreneurship and Innovation
Embrace Economic Liberalization
Enhance Infrastructure Development
Promote Fiscal Discipline and Sound Macroeconomic Policies
Leverage Technology and Digital Transformation

25. INSIGHTS FOR SRI LANKA:
 Fiscal Discipline: Sri Lanka can learn from Malaysia's commitment to fiscal
responsibility and gradual deficit reduction.
 Governance and Digital Transformation: Emphasizing value-based governance
and accelerating digital transformation can enhance efficiency in Sri Lanka's public
services.
 Economic Diversification: Sri Lanka can explore initiatives to promote economic
complexity, digitalization, and green growth for a more resilient and diverse
economy.
 SME Empowerment: Special attention to SMEs is crucial for economic recovery
and job creation in Sri Lanka.
 Social Safety Nets: Prioritizing targeted subsidies and social safety nets can help
alleviate the impact on vulnerable populations during economic challenges.

26. OPPORTUNITIES
 IMF-EFF Programme:
o Opportunity: The IMF-EFF program provides an opportunity for much-needed and long-neglected structural
adjustments. Successful implementation can shape the economy towards greater stability and sustained growth.
 Debt Restructuring:
o Opportunity: The advanced stage of the debt restructuring process offers an opportunity to address debt-related
challenges and create a more sustainable fiscal position.
 Macroeconomic Adjustment:
o Opportunity: Engaging with the IMF on a macroeconomic adjustment program can pave the way for necessary
economic reforms, addressing issues related to fiscal discipline and external imbalances.
 Reform Commitment:
o Opportunity: Policymakers' commitment to implementing policy reforms in a timely, holistic, and efficacious
manner is crucial. Consistent commitment, irrespective of political cycles, can strengthen the economy's resilience.
 Global Economic Recovery:
o Opportunity: While global uncertainties exist, a potential global economic recovery could provide opportunities
for Sri Lanka's exports and external sector performance.

27. CONCLUSION