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Sri Lanka Business Forecast Report Q1 2014 - New Report Available


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2013-12-08 16:41:07 - Fast Market Research recommends "Sri Lanka Business Forecast Report Q1 2014" from Business Monitor International, now available

Despite the ruling United People's Freedom Alliance (UPFA)'s electoral defeat in the Northern Province's recent elections, the Rajapaksa regime's success in holding largely peaceful elections in a majority-Tamil area should help in deflecting international pres -sure and criticism off of Colombo to enhance reconciliation efforts following the recent end of the country's decades-long civil war.

While a recovery in exports and robust government spending have continued to drive Sri Lankan economic activity in 2013, the invest -ment story has so far failed to recapture its double-digit growth form of 2011-12. Still, we are cautiously optimistic that a strengthening currency, rejuvenated export performance, and lower borrowing costs can kick start investment activity in the coming quarters.
The Central Bank of Sri Lanka (CBSL)

shocked the market in October, cutting its reverse repo rate by 50 basis points (bps) to 8.50% and extending the current easing cycle to 125bps. Looking ahead, we cannot rule out further loosening in the near term, given that real lending rates remain relatively high, private sector credit growth continues to cool, and the bond market is pointing to additional cuts. With this in mind, the downside risks to our view of a prolonged pause remain acute.

Full Report Details at
- www.fastmr.com/prod/751978_sri_lanka_business_forecast_report_q1 ..

We believe that the recent weakness in the Sri Lankan rupee is both a blessing and a curse for Sri Lanka's booming tourism industry. With the rupee now at the cheapest it has ever been against the euro, it should help to entice additional arrivals from the bloc which remains the island's top tourist market. That said, the downside of having to deal with a much weaker rupee is that the cost of major tourism-related infrastructure developments is likely to face some upside pressure.

Major Forecast changes

We continue to forecast reasonably healthy real GDP growth rates of 6.4% and 6.8% in 2013 and 2014, respectively, which would make the island one of the fastest growing economies in the region.
Key risks to outlook

Upside Risks To Current account Deficit: Risks include the po -tential for adverse global commodity price movements (especially that of oil prices), renewed weakness in the country's main export markets (the EU and the US), and political instability in its key sources of remittance inflows (the Middle East).

Partial Table of Contents:

executive summary
core Views
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
sWot analysis
BMi political risk ratings
Domestic politics
Elections Deflect International Pressure, Risk Raising Domestic Tension
- Sri Lanka held three provincial elections on September 21, with the Northern Province polls taking centre stage as the Tamil National Alliance (TNA) surged to a landslide victory in the region's first council elections in 25 years. Despite the UPFA's electoral defeat in the Northern Province, the Rajapaksa regime's success in holding largely peaceful elections in a majority-Tamil area should help in deflecting international pressure and criticism off of Colombo to enhance reconciliation efforts following the recent end of the country's decades-long civil war.
taBLe: poLitica L oVerVie W
Long- term political outlook
Major challenges over the coming Decade
- We expect Sri Lanka to continue on a path towards increased accountability in politics over the coming decade. While the end of armed conflict with Tamil separatists provides an opportunity for politics to evolve, we maintain that tensions between the Tamil minority and the Sinhalese majority are likely to remain a major political issue for the foreseeable future.
chapter 2: economic outlook
sWot analysis
BMi economic risk ratings
economic activity
- While a recovery in exports and robust government spending have continued to drive Sri Lankan economic activity in 2013, the investment story has so far failed to recapture its double- digit growth form of 2011-12. Still, we are cautiously optimistic that a strengthening currency, rejuvenated export performance, and lower borrowing costs can kick start investment activity in the coming quarters. As such, we continue to forecast reasonably healthy real GDP growth rates of 6.4% and 6.8% in 2013 and 2014, respectively, which would make the island one of the fastest growing economies in the region.
taBLe: econoMic actiVit Y
Monetary policy
could the cBsL cut again?
- The Central Bank of Sri Lanka (CBSL) shocked the market in October, cutting its reverse repo rate by 50 basis points (bps) to 8.50% and extending the current easing cycle to 125bps. Looking ahead, we cannot rule out further loosening in the near term given that real lending rates remain relatively high, private sector credit growth continues to cool, and the bond market is pointing to additional cuts. With this in mind, the downside risks to our view of a prolonged pause remain acute.
taBLe: M onetarY poLicY
Balance of payments
Weak rupee a Blessing and curse For tourism
- We believe that the recent weakness in the Sri Lanka rupee is both a blessing and a curse for Sri Lanka's booming tourism industry. With the rupee now at the cheapest it has ever been against the euro, it should help to entice additional arrivals from the bloc which remains the island's top tourist market. That said, the downside of having to deal with a much weaker rupee is that the cost of major tourism-related infrastructure developments is likely to face some upside pressure.
taBLe: current account
Fiscal policy
soe threat to Banking stability overblown

Full Table of Contents is available at:
-- www.fastmr.com/catalog/product.aspx?productid=751978&dt=t

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.


Author:
Bill Thompson
e-mail
Web: www.fastmr.com
Phone: 18008448156

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