Sri Lankan Economy
- Exports: Surpassing the USD 1 billion mark for the second consecutive month, export earnings increased by 16% on a Y-o-Y basis in August 2017, showing early positive benefits from the lifting of the fisheries ban last year and restoration of the GSP+ facility. This growth was mainly driven by industrial exports followed by agricultural exports. Industrial exports grew by 13% owing to the increase in exports of textiles and garments with an increase in garment exports to the EU market.
- Imports: Registering the second highest import value so far during the year, expenditure on imports increased by 13% Y-o-Y in August 2017, owing to the higher expenditure incurred on intermediate goods. Expenditure on intermediate goods increased by 24% Y-o-Y mainly due to the increase in fuel imports by 73% Y-o-Y driven by higher crude oil prices during the month.
- Balance of Payment: Despite the expansion in the trade deficit by 12%, the overall balance of the BOP is estimated to have a recorded surplus of USD 2.2 billion during the first eight months of 2017 compared to the surplus of USD 0.2 billion recorded during the same period in 2016. A key reason for this has been the improved performance in financial inflows.
- FDI: According to provisional data released by the Central Bank of Sri Lanka, FDI inflows in the first half of 2017 had been USD 711 million. In the same period in the first half of 2016, FDI inflows were USD 293 million.
- Inflation: In September 2017, CCPI inflation increased to 7.1% (from 6.0%) while CCPI core inflation remained unchanged at 6%. Meanwhile, the nationwide inflation index- NCPI increased to 8.6% (from 7.9%) and NCPI core inflation decreased to 4.6% (from 4.8%). A rise in F&B inflation was a key driver for the increase in headline inflation for both indices.
- Credit Growth: Private sector credit growth remained unchanged on a Y-O-Y basis (18%) in August 2017.
- Currency: As at 24th October 2017, the LKR has depreciated 2.6% against the USD so far during 2017.
- HIES: The Household Income and Expenditure survey (HIES) for 2016 revealed that the real median household income per month was Rs.30, 285 in 2016, an increase of 20.6% from the 2012/13 survey. The real median household expenditure for 2016 was Rs.27, 971, an increase of 12% from 2012/13.
- Global Oil Prices: Global oil prices rose to its highest value since July 2015 to USD 53.44 per barrel in September 2017 (as per the OPEC Reference basket). The Monthly Oil Market Report of the OPEC stated that geopolitical tensions and supply rebalancing were key reasons for the rise.
- Global Economic Growth: As per the World Economic Outlook (WEO) update for October 2017 published by the IMF, global growth is projected to be 3.6% in 2017 and 3.7% in 2018, a marginal upward revision of 0.1 percentage point for both 2017 and 2018 relative to the April 2017 update.
- Growth in US, UK and China: The US economy is projected to expand by 2.2% in 2017 and 2.3% in 2018, according to the WEO update. Growth in the UK economy is projected to ease to 1.7% in 2017 and 1.5% in 2018. The 0.3 percentage point downward revision to the 2017 forecast is driven by weaker-than-expected growth outturns for the first two quarters of the year. In the same update, the IMF revised China’s growth projections upward for 2017 by 0.2 percentage points to 6.8% compared to the April update. Projected growth for 2018 is 6.5% which is 0.3 percentage points higher than the growth forecasted in the April update.