New Country Reports market report from Business Monitor International: "Sri Lanka Business Forecast Report Q2 2013"
Boston, MA -- (SBWIRE) -- 04/30/2013 -- Core Views
We have long cautioned that the political unassailability of the ruling United People's Freedom Alliance greatly increases the risk of government overreach. Recent developments, such as the impeachment of the country's chief justice, have only bolstered our view.
More than two and a half years after the EU decided to withdraw preferential tariff benefits to Sri Lanka, it appears that the country's exporters are now beginning to feel the economic squeeze. The ruling government's inadequate progress on the human rights front suggests to us that these privileges are unlikely to be reinstated any time soon.
View Full Report Details and Table of Contents
We do not see the island's economic growth turning up until H213 at the very earliest, implying that the ongoing slowdown will likely intensify in H113. We are keeping to our 5.4% full-year real GDP growth forecast for 2013. The island's economy is still feeling the pinch on multiple fronts, namely high credit costs, the weak Sri Lankan rupee, and the fragile state of developed markets.
With price concerns gradually diminishing, we believe that the primary focus of the Central Bank of Sri Lanka (CBSL)'s policies over the coming 12 months will be economic growth. We are projecting 100 basis points of additional easing in 2013, taking the reverse repo rate to 8.50% by end-2013. Crucially, the CBSL's annual road map signals further loosening of monetary policy in the months ahead.
Currency stability is likely to be the overriding theme for the central bank following a fairly volatile 2012. The CBSL explicitly expressed exchange rate stability as one of its policy priorities in its annual road map for the year ahead, reiterating its willingness to intervene.
The government aims to narrow the fiscal deficit to 5.8% of GDP by end-2013. We believe there will be nothing revolutionary about how the government conducts its business this year, and that the amount of fiscal consolidation will very likely be minimal at best.
While the country's overall business environment remains mediocre from a pan-Asian perspective, we cannot ignore the rapid and dynamic changes taking place in its regulatory framework, which indicate that its business environment is making significant strides. This is likely to help to sustain the country's foreign direct investment boom.
Major Forecast Changes
We have toned down our expectations for further rupee strength and have set a conservative target of LKR126.00/US$ by end 2013, with the unit expected to average at LKR126.85/US$ for the year.
About Fast Market Research
Fast Market Research is an online aggregator and distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff will help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.
Browse all Country Reports research reports at Fast Market Research
You may also be interested in these related reports:
- Brazil Business Forecast Report Q2 2013
- Hungary Business Forecast Report Q2 2013
- Germany Business Forecast Report Q2 2013
- Philippines Business Forecast Report Q2 2013
- Russia Business Forecast Report Q2 2013
- Cote d'Ivoire Business Forecast Report Q2 2013
- Trinidad & Tobago Business Forecast Report Q2 2013
- Singapore Business Forecast Report Q2 2013
- Bulgaria Business Forecast Report Q2 2013
- Chile Business Forecast Report Q2 2013