Boston, MA -- (SBWIRE) -- 11/27/2015 -- Following the re-election of the United National Party in August polls, and the return of political stability, Sri Lanka's economy will likely see a slight pickup in growth over the coming quarters. As such, we maintain our forecast for Sri Lanka's GDP to come in at 6.5% in 2015, and 6.7% in 2016.

The formation of a national unity government will be constructive for Sri Lanka's foreign policy and Sinhalese-Tamil reconciliation. While the consensus resolution adopted by Colombo and the international community indicates that progress will continue to be made, we believe that the reconciliatory process will continue to be a challenging one.

Major Forecast Changes

The Central Bank of Sri Lanka (CBSL) will likely keep its policy rate on hold over the coming months as it remains hamstrung by the country's rising fiscal deficit, high public debt-to-GDP ratio, weakening current account balance, and a depreciating currency. Meanwhile, in order to ease downwards pressure on its foreign reserves, the CBSL appears to have devalued the unit by 2.2% on September 7. We now forecast the rupee to weaken further against the dollar, taking the exchange rate to LKR142.00/USD by end-2015, down from our previous forecast of LKR135.00/USD.

Get More Details on this Report and a Full Table of Contents at Sri Lanka Country Risk Report Q1 2016

The depreciation of the Sri Lankan rupee will likely provide some level of support for the island-nation's trade position over the coming quarters. Coupled with strong growth in the tourism sector and steady inflow of remittances, these factors will likely prevent the current account deficit from widening too much. As such, we have revised our forecast for Sri Lanka's current account deficit to come in at 3.1% of GDP in 2015, and 3.4% in 2016, versus our previous forecasts of 3.4% and 3.7%, respectively.

The Sri Lanka Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Sri Lanka and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Sri Lanka's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

-Forecast the pace and stability of Sri Lanka's economic and industry growth through end-2017.
-Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
-Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
-Contextualise Sri Lanka's country risks against regional peers using BMI's country comparative Risk Ratings system.
-Evaluate external threats to doing business in Sri Lanka, including currency volatility, the commodity price boom and protectionist policies.

The Sri Lanka Country Risk Report by Business Monitor International (BMI) includes three major sections: Economic Outlook, Political Outlook and Business Environment.

Economic Outlook:

How will the Sri Lankan economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Sri Lanka through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Sri Lanka Country Risk Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

-Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
-BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

-Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
-Balance of Payments - trade and investment, current and capital account.
-Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
-Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
-Fiscal Policy

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