Sri Lankan Economy
- Gross Domestic Product (GDP)- GDP for the Q1 of 2016 at constant prices reportedly reached up to Rs. 2,088,024mn resulting a positive growth rate of 5.5% compared to the Q1 of 2015. Industrial and Services activities had recorded a remarkable increase in their overall growth rates of 8.3% and 4.9% respectively, but the overall growth rate of the Agricultural activities have shown only a slight increase of 1.9%.
- Exports: February 2016 data for exports indicated a negative growth of 1.7% on YoY basis compared to 2015. Contraction in export of tea (6.8%) and rubber products (10.7%) were the largest contributors to the drop in exports.
- Imports: Imports contracted by 5.9% on YoY terms in February 2016 driven by the negative growth in major import categories (fuel – 43.7%, food and beverages -16%) contributing to a YoY improvement in trade balance by 11.9%.
- Inflation: Core inflation continued to edge up in May 2016, an increase from 4.5% to 6.6% from the previous month and from 2.6% a year earlier.2016
- Growth Forecast: 2016 Economic growth forecast for Sri Lanka are expected in the range between 5%-5.3% by the IMF (5%) and World Bank (5.3%) according to the latest updates for June 2016.
- IMF Extended Fund Facility: IMF approved a three year EFF of USD 1.5bn (SDR 1.1bn) to support the Balance of Payment position of Sri Lanka with the first tranche amounting USD 168.1mn ready for disbursement immediately.
The Global Economy
- Global Growth forecast: World Bank downgraded the 2016 global growth forecast to 2.4% in June from 2.9% in January 2016 due to weak growth recovery in advanced economies, low commodity prices, weak global trade and diminishing capital Flows.
- Economic Growth in South Asia: South Asian region is recognized by the World Bank to be the fastest growing region in the world with an accelerated growth figure from 7.1% in 2016 to 7.3% in 2017 driven by limited exposure to global turbulence, coupled with increasing investment activity.
- Britain’s EU Referendum-Latest opinion polls suggest a marginal victory to the ‘Leave’ campaign, calling for Britain to exit the EU (“Brexit”), although big corporates, international leaders, and financial institutions have all signaled the substantial damage to the British, and wider EU economy, of such a move. Estimates by The Economist newspaper indicate that leaving the EU would trigger a recession in the UK and set real GDP back by 6% by 2020. The uncertainty caused by a “Leave” vote would upset consumer and market sentiment, causing a 14-15% devaluation of the pound against the US dollar