Sri Lanka shows growth in business confidence for second straight month in May
Daily FT: In its May edition, leading business magazine LMD reports that “business confidence strengthened for a second month although the horizon remains overcast.”
LMD notes: “In April, the LMD-PEPPERCUBE Business Confidence Index (BCI) breached the 90 points threshold for a second consecutive month. The barometer registered a marginal increase of three basis points to reach 96, which is 11 notches higher than the median for the last 12 months (85).”
But the index continues to lag behind its all-time average of 123, the magazine observes, adding that “it is 12 points below where it stood a year ago (108), which was when the IMF framework was put to bed.”
PepperCube Consultants attributes the outcome of its exclusive poll for LMD to an increase in optimism among corporates over the economy and their expectations of maintaining sales volumes over the next 12 months.
It asserts that despite “acclimatisation to the higher VAT,” high taxes remain a challenge for businesses as is the interest rate regime.
A spokesperson for LMD said: states: “PepperCube also notes that despite the increase in political activity in recent weeks, economic pressures continue to overshadow politics and the political culture.”
“The reality is that businesses continue to grapple with key indicators such as high costs, high taxes and relatively high interest rates,” she added.
The magazine cautions that “the trajectory of the index in the next six months or so is likely to remain uncertain, given the prospect of political turmoil ahead of the election season.”
OSL take:
Sri Lanka’s economy has shown great resilience to external and internal shocks in the past and is once again on the growth path after facing challenging economic conditions as a result of the global pandemic and its aftermath. The successful recovery shown by Sri Lanka is evident with the ongoing economic activities as well as the growth and profits recorded by the country’s private sector amidst challenging economic conditions. Supported by Sri Lanka’s strategic positioning in the Indian Ocean and the many trade agreements as well as trade concessions enjoyed with other countries, Sri Lanka is once again on the path to becoming a regional hub. The positive movements in the country’s economy and the expanding business/investment opportunities in the country are obviously not lost on the foreign businesses/investors who have shown keen interest in exploring the expanding opportunities in Sri Lanka. Some globally recognized businesses have already expressed interest in exploring and investing in opportunities in Sri Lanka. The strength and growth of Sri Lanka’s economy has also opened up opportunities for foreign businesses to explore the possibilities of forming collaborations with local businesses with the aim of further expansion.