Sri Lanka’s LMD-Nielsen Business Confidence Index increases by eight basis points in May 2018

Sri Lanka’s LMD-Nielsen Business Confidence Index increases by eight basis points in May 2018

The LMD-Nielsen Business Confidence Index (BCI) increased by eight basis points to 106 in May, the latest edition of the business magazine Lanka Monthly Digest (LMD) has stated.
LMD has noted that this recovery follows two months of decline due to political uncertainty in the country. However, the magazine has pointed out that the one-of-a-kind index fell short of its 12 month average of 116.
In the June edition of the magazine, Nielsen’s Managing Director Sharang Pant has pointed to perceptions that political instability has tapered and the government pursuing its fiscal consolidation objectives as possible reasons for the rise. He cites the easing of inflation – as indicated by the National Consumer Price Index (NCPI) decrease in April – as supporting this.
Pant has stated: “This could augur well for a revival of consumption especially in fast-moving consumer goods (FMCG), which according to Nielsen estimates continued to decline at a high rate even in the first quarter of 2018.”
He has further stated that the recent fuel price hike may lead to price increases and that this in turn this could affect the index in the future.
The leading business magazine has reported that the tax structure, rupee value and high interest rates are among the main concerns of corporates.
To this end, a survey respondent has noted that “the exchange rate is very poor,” as well as “economic and financial indicators are not positive.”

OSL take:

The increase recorded in the LMD-Nielsen Business Confidence Index for the month of May 2018 indicates the growing levels of business confidence in Sri Lanka. The Sri Lankan government’s aggressive pursuit of fiscal consolidation would further increase the business confidence in the country.

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Article Code : VBS/AT/20180612/Z_1

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