Sri Lankan Economy
- Exports, for the first time since February 2015 saw Y-o-Y increase by 8.4% in August 2016. Exports for the first nine months were still down 4.1% on a cumulative basis compared to the same period last year. Imports grew steadily as well, rising by 8.3% Y-o-Y.
- Inflation(CCPI) recorded a marginal increase from 3.9% to 4.2% in October 2016. Core inflation remained unchanged at 4.2% from last month.
- Fiscal target for the forthcoming year was announced during the Budget Speech this month. The government announced reforms towards fiscal consolidation, aiming to reduce its fiscal deficit from 5.4% of GDP this year to 4.6% by 2017.
- Purchasing Manager’s Index (PMI) figures for October 2016 showed strong expansion rates for both the Manufacturing and Services sectors. Manufacturing grew at a slower pace – dropping 1.1 points from last month to 56.5. PMI for services recorded strong figures this month – rising to 59.3 points this month, indicating expansion at a much higher pace
- Tourism arrivals and earnings grew at steady rates, rising by 14.5% and 14 % respectively. Total tourism arrivals amounted to 1.68 Mn, on track towards exceeding 2 Mn figure this year.
- The World Bank released its development update for Sri Lanka, highlighting a relatively favorable outlook, largely due to key policy reforms such as monetary tightening and enhanced currency flexibility contributing towards short-term stability. The World Bank also estimated growth to stay marginally above 5.0% for 2016.
- Credit to the Private Sector fell slightly to 27.3% in August, 1.2 percentage points higher than last months. However, Private Sector Credit levels are still significantly higher than last years – which stood at 21.3%.
- On the 8th of November, Prime Minister Narendra Modi dramatically announced that the government will scrap its two highest currency denominations – Rs. 500 and Rs. 1000 – with immediate effect. The scheme signifies the government’s intent on tackling black money and corruption, which has plagued India’s economy for decades.
- The Capital Economic China Activity Proxy (CAP) recorded growth rates for the month of October at 6%, which has been its highest in three years. However, growth is expected to reduce in 2017 as property markets begin to show signs of slowing down.
- The Organization of the Petroleum Exporting Countries (OPEC) released its World Oil Outlook. The report expected prices to remain in the USD 40 – 50 range for 2016, with prices expected to recover with USD 5-a-barrel annual increments in the period up to 2021.
- Precious and Base Metals saw strong increases for 2016, with Gold and Silver making strong gains mid-year, amidst rising economic uncertainty, only to be offset by strengthening of the dollar by end 2016. Base metals showed recent gains as well, bouncing off Trump’s surprise victory.