Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය

Latest topics

» RAL.N at Rs2.40
by lakmal87 Today at 7:04 am

» ONLY GOODNESS OF YAHAJADAAPLANAS
by Ryan Hudson Today at 5:50 am

» Pan asia power PAP
by Ran49 Yesterday at 8:11 am

» Lanka Cement
by Ran49 Yesterday at 8:09 am

» CTBL-Rights
by ruwan326 Fri Jan 12, 2018 11:57 am

» US revamps travel warning system; SL gets an okay
by TraderCSE Fri Jan 12, 2018 8:07 am

» HVA getting ready once more
by anjelo Thu Jan 11, 2018 11:04 am

» What do you expect in CSE performance prior to LOCAL GOVT.ELECTIONS?
by ONTHEMONEY Thu Jan 11, 2018 10:35 am

» best stocks to buy now
by ranferdi Thu Jan 11, 2018 8:49 am

» FATAL ATTRACTION??????????
by samaritan Wed Jan 10, 2018 11:13 am

» Wiser's TA Chart Room
by wiser Wed Jan 10, 2018 10:54 am

» CFT share එක මොනව හරි දෙයක් වෙනව වාගෙ.
by 2017 Cse Tue Jan 09, 2018 11:02 pm

» Treasury posts Rs22bn primary surplus in Budget, first time in 63 years
by kovida Tue Jan 09, 2018 4:23 pm

» UNION BANK (UBC)
by peiris Tue Jan 09, 2018 2:42 pm

» FUTURE GEMS - Kind help
by Elahara Mon Jan 08, 2018 10:47 am

» Perpetual Treasuries to get a most of Treasury Bill-Bond Business of New Government?
by ranferdi Mon Jan 08, 2018 8:22 am

» TIME TO BUY KZOO.........
by Elahara Sun Jan 07, 2018 3:09 pm

» JETS N0000 - what is your idea on this share
by anges Fri Jan 05, 2018 3:53 pm

» SFL, ALUF, KAPI AND ANILANA ARE ON THE RACE, THE SAME BUYER PLAYING!!!
by wisdom79 Wed Jan 03, 2018 8:38 pm

» නොමිළේම ඩොලර් 18$
by nuwandwo Wed Jan 03, 2018 4:17 pm

» A NEW YEAR WISH
by Ryan Hudson Wed Jan 03, 2018 3:16 pm

» ELECTION RESULT AND THE MARKET
by Ryan Hudson Wed Jan 03, 2018 3:16 pm

» TJL මොකද වෙන්නෙ.
by ddrperera Wed Jan 03, 2018 12:01 am

» NO more USA GSP
by ranferdi Sat Dec 30, 2017 6:11 am

» Lankem Developments PLC
by sanjulanka Thu Dec 28, 2017 11:59 pm

HashFlare

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Talk » Tight fiscal and monetary policies expected to constrain Sri Lanka's growth next year

Tight fiscal and monetary policies expected to constrain Sri Lanka's growth next year

View previous topic View next topic Go down  Message [Page 1 of 1]

Quibit

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Sri Lanka's economic growth in 2017 and 2018 will be constrained by tight fiscal and monetary policies under the International Monetary Fund (IMF) program and private investment will have to play a primary role in maintaining economic growth, the Asian Development Bank (ADB) says. 
The economic growth slowed in 2016 to 4.4% with a marked fall in agricultural production weakened by the adverse weather, but a pickup in construction and investment helped to sustain growth while the inflation was highly variable over the year but moderated in general, as was the current account deficit. 
The outlook is for modest recovery in growth as the government implements an economic program of fiscal reform to tackle persistent macroeconomic imbalances and a large public debt. 
The ADB in its latest Asian Development Outlook 2017 projects Sri Lanka's economy to grow 5% in 2017 and 2018 while the inflation to be maintained at 6%.
Raising the country's very low revenue ratio is the major priority of fiscal consolidation under the IMF program. However, the higher VAT introduced in 2016 and improved income tax collection in 2017 will depress consumption, outweighing the positive impact of a modest increase expected in worker remittance earnings, the ADB report says. 
The goal is for total revenue to equal 15.0% of GDP in 2017.
Private investment is expected to continue to expand modestly in 2017. While monetary tightening has slowed the expansion of credit to the private sector, credit for productive purposes would be available even with the boost in policy rates announced in March 2017. 
"However, further monetary tightening in response to adverse developments cannot be ruled out in 2017," the report noted. 
Faster growth expected in the major industrial economies should lift export performance, but this will be offset to some degree by higher oil prices. 
On balance, GDP growth is expected to edge up to 5.0% in 2017, the rate maintained in 2018 with further consolidation reform.
The government projected a budget deficit equal to 4.6% of GDP in 2017, down from 5.6% estimated for 2016.
Inflationary pressure from the higher VAT and modest depreciation of the rupee in the second half 2016 will add to the inflation expected from slightly higher import prices. Accordingly, average inflation is projected at 6.0% in 2017 and 2018.
External demand is expected to recover gradually in 2017 and 2018. Exports are projected to grow by 4% in 2017 and 5% in 2018 on the bases of gradual recovery of global demand, the renewal of concessions under the Generalized System of Preferences Plus, the removal of the European Union ban on fish imports, and the possible finalization of several free trade agreements.
A larger services surplus will be driven by continued rapid expansion in tourism over the next 2 years. Worker remittances are expected to increase at a moderate pace.
The ADB report says despite reaching per capita income close to the upper-middle-income threshold, Sri Lanka persistently relies on a narrow manufacturing base.
Exports are still 60% apparel and tea, and worker remittances remain a major source of foreign currency earnings. Since the end of the civil conflict in 2009, Sri Lanka has not attracted much foreign direct investment in manufacturing that could diversify manufacturing and exports, according to the report. 
Also important is to expand economic activity beyond Colombo and Western Province. As of 2015, Western Province, one of nine provinces, produced 41% of GDP. Further, per capita GDP in Western Province is about 1.4 times higher than in other provinces, underlining the need for regional development to make economic growth more inclusive. 
The government has recognized the importance of diversifying the export base and the government has taken up economic corridor development as a policy instrument to promote economic growth and address geographic imbalances.

However, for the implementation of economic corridor development to succeed, ADB says it is imperative to identify new industrial clusters with future growth sectors and nodes along the corridors.

View previous topic View next topic Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum