Perceived Economic Opportunity PEO: September, 2017

This brief report of the Perceived Economic Opportunity (PEO) presents the analysis of a random survey carried out using a random sample of 400 men and women 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 in the month of September 2017 indicates that the expectations in terms of job prospects of people or developing the status of their business in the ensuing 12 months has been increased compared to August 2017. The same expectations had fallen in the month of August 2017.

This expectation has been shrinking and increasing from time to time since October 2016 and shows that these reductions and increases have not occurred in large numbers. In other words, this expectation has not undergone through major changes during this period.

Inflation, as measured by the change in the National Consumer Price Index (NCPI) increased to 8.6 per cent in September 2017 from 7.9 per cent in August 2017, on year-on-year basis. Both Food and Non- food categories contributed towards the year-on-year inflation in September 2017. Inflation stood at 6.3 per cent in the July 2017.

The external sector performance was driven by a double digit growth in exports (year on-year) in September 2017, surpassing the US dollars 1 billion mark of monthly exports for the third consecutive month. Reflecting continuous investor confidence, the financial account of the Balance of Payments (BOP) continued to strengthen during the month with higher foreign inflows to the Colombo Stock Exchange (CSE) and the government securities market. Subsequently, the overall balance recorded a surplus of US dollars 2.0 billion by end September 2017. Meanwhile, gross official reserves increased to US dollars 7.3 billion as at end September 2017 from US dollars 6.0 billion as at end 2016.

The export growth of the month of September 2017 was mainly led by higher earnings from industrial exports owing to the increase in exports of textiles and garments as a result of improved garment exports to both the USA and EU market.

Expenditure on imports increased in September 2017, recording a double digit growth for the third consecutive month as a result of higher expenditure incurred on intermediate goods, particularly fuel. Expenditure on fuel imports increased significantly due to the combined effect of high prices in the international market and higher volumes of fuel imported for thermal based power generation.

Earnings from tourism declined moderately during the month of September 2017 while foreign remittance also slowed down.

The below graph shows the change of expectations in terms of job prospects of people, or developing the status of their business, in the ensuing 12 months.

Refer the graph 01 below;

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 September 2017.

ABILITY TO SAVE

According to the analysis in the month of September 2017, the expectation among the people to save a little more from their personal earnings in the ensuing 12 months has increased in the month of September compared to the month of August2017. Development of investor confidence and other reasons may have impacted this change.   The same expectation showed a decline in the month of July 2017.  Please Refer the Graph 02;

EXPECTATION FOR REDUCTION OF CORRUPTION

The expectation for reduction of corruption in the country which showed an increased trend in the month of July 2017, took a fall in the month of August 2017. It is noted that the same expectation continued to fall in the month of September 2017.

Sri Lanka appointed a Special Presidential Commission of Inquiry to investigate the controversial Central Bank bond issue and recommend action, in the month of January 2017 and the report is to be released in the near future.

Please Refer the Graph 03;

PEO; Perceived Economic Opportunity is developed and surveyed by the Foundation for Economic Freedom in Sri Lanka. PepperCube Consultants carry 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.