Perceived Economic Opportunity PEO: December, 2016

This brief report of the Perceived Economic Opportunity (PEO) presents the analysis of a random survey carried out using a sample of 400 men and women in December 2016 covering all districts in Sri Lanka on their expectations of economic prospects in the ensuing twelve months.

STATUS OF JOB PROSPECTS OR BUSINESS PERFORMANCE

Analysis of the perceived economic opportunities shows that expectations among the people for reduction of corruption has decreased in the month of December 2016 compared to the growth in November 2016.

Accordingly the nature of the economic expectation of the people shows a frequent changing behaviour in the past months in contrary to long term stability.

The expectations in terms of job prospects of people or developing the status of their business, stood at 12 percent in the month of September 2016 but decreased to 9 percent in the month of October.

The same was increased to 12 percent in the month of November and stabilized at same in the month of December 2016.

The Minister of Finance recently said that the job opportunities will increase with the rise of direct foreign investment in the year 2017. The Government of Sri Lanka also announced that 2400 new factories will be formed as a result of the Hambantota port project that the government plans to initiate with China.

State revenue has increased by 23 percent during the first 9 months of this year compared with the same period in 2015, the Ministry of Finance stated.

The rupee weakened 152 against the US dollar in the month of December and the Colombo Stock Exchange recorded the lowest turnover in December 2016.

Inflation, as measured by the change in the National Consumer Price Index (NCPI) (2013=100), which is compiled by the Department of Census and Statistics, increased marginally to 4.2 per cent in December 2016 from 4.1 per cent in November 2016, on year-on-year basis. Both Food and Non-food categories contributed towards the year-on-year inflation in December 2016.

The expectations in terms of job prospects of people or developing the status of their business in the ensuing 12 months, stood at 15 percent in the month of December 2014 and increased to 40 percent in the month of January 2015 soon after the new government assumed office.

On the external front, the cumulative deficit in the trade balance widened further in the month of October, as a result of increased imports expenditure, amidst the contraction in export earnings. However, strengthening the external position, earnings from tourism and the remittance of workers increased in the month of October 2016.

On a cumulative basis, export earnings during the first ten months of 2016 decreased by 2.6 per cent, year-on-year, compared to 2015, Central Bank data showed. Agricultural exports, such as tea and spices, contributed to the contraction in exports during this period. However, earnings from textile and garment exports, which account for about 48 per cent of total exports, increased during the first ten months of 2016.

These reasons are likely to have had an impact on the expectations of job prospects and the business activities of the people in the month of December 2016.

ABILITY TO SAVE

According to the analysis in the month of December 2016, expectation among the people to save a little more from their personal earnings in the ensuing 12 months had shown a significant increase.

The expectation was steady in the months of October and November and was up by 15 percent in the month of December 2016.

The expectation of the ability to save was at a significantly higher level when the current government came into office. (Please Refer the Graph 02)

EXPECTATION FOR REDUCTION OF CORRUPTION

The higher expectation for the reduction of corruption in the country that many expected at the time the current government came into office has gradually decreased in past months.

But it is significant to note that this perception took a dramatic fall in October 2016 firm that of the previous month. It is very likely that this decrease is due to the much publicized issue of the probe by the Parliamentary Committee on Public Enterprises, or COPE.

However, it is noted that the same expectation which showed an increased in the month of November 2016 again decreased in the month of December. ( Please Refer the Graph 03)

PEO; Perceived Economic Opportunity is developed and surveyed the Foundation for Economic Freedom in Sri Lanka. PepperCube Consultants carries out field research covering the entire country.

The Perceived Economic Opportunity was developed and is measured by the Foundation for Economic Freedom in Sri Lanka (FEF) in partnership with Friedrich Naumann Stiftung Fur Die Freiheit.