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Uncertainty clouds loom over Sri Lanka’s economic outlook – Biz Survey

By: Staff Writer

February 13, Colombo (LNW): “Businesses enter February with a sense of trepidation, uncertain about what the near term holds. This uncertainty is reflected in the latest LMD-PEPPERCUBE Business Confidence Index (BCI) survey,” business magazine LMD notes, in its February edition.

It explains that a quarter of BCI survey participants “express optimism about the economy ‘improving’ in the next 12 months,” marking a four-point increase from December (21%),” and 19% anticipate the economy to ‘stay the same,’ reflecting a 3% point reduction from the previous month.

But a majority of 56% anticipate the economic situation to ‘get worse,’ which is a 1% drop from December, LMD adds.

The magazine also reports that in relation to sales volumes, there’s a sense of optimism about the next 12 months’ outlook with 29% of respondents expecting sales to ‘get better,’ which reflects a two-point increment compared to the preceding month.

Looking ahead to the next three months, LMD reports that there’s pessimism regarding sales volumes ‘getting better’ with 22% saying so – that’s a marginal decline from the 26% recorded in the previous month.

“On the other hand, over a quarter (28%) believe that sales volumes will ‘stay the same,’ which represents an increase of 3% points from December,” it adds, noting also that “overall sentiment remains subdued with half (50%) of those polled expecting their sales to ‘get worse’ in the next three months.”

LMD’s publisher, Media Services, says the latest edition of the magazine has been released. And its digital edition has been shared on WhatsApp and the publisher’s social media platforms.

The magazine’s Cover Story features the ADB’s Sri Lanka Country Director Takafumi Kadono, who says: “I take this opportunity to reaffirm our support for Sri Lanka.” The full story has been uploaded on LMD’s website (www.LMD.lk).

In 2023, Sri Lanka faced significant economic and political challenges including a contraction in GDP and a rise in taxes, yet improvements were noted later in the year including reduced inflation, currency appreciation and increased remittances.

Politically, the country dealt with a decline in civil liberties, allegations against former presidents,an elusiveness of popular support for the current president and a pivotal upcoming election in 2024.

The World Bank later revised its forecasts, noting Sri Lanka’s progress in reducing inflation and benefits accruing from tourism revenue and currency appreciation.

 The Bank now expects a 1.7 per cent economic expansion in 2024, up from its earlier 1 per cent forecast. In the last six months of 2023, Sri Lanka experienced reduced inflation, a 12 per cent currency appreciation, improved foreign reserves and increased remittances.

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