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18 January, 2016 09:17 AM Source: Financial Times - Sri Lanka
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A measure of optimism regarding the economy is reflected in the latest LMD-Nielsen Business Confidence Index (BCI), which rose marginally by five basis points – from 152 to 157 – in December, business magazine LMD reports in its latest edition. However, the index remains seven rungs below the average for calendar year 2015.

Nielsen’s Managing Director Shaheen Cader feels this slight spike confirms “an underlying positive growth trend,” in spite of the peaks and dips evinced recently due to elections and their aftermath.

 “Despite concerns about high taxation… the business sector is more optimistic about the Sri Lankan economy,” he says, pointing out that the BCI has not been affected by the rupee’s depreciation. This suggests that businesspeople have accepted the devaluation as being necessary for economic growth, and as a corrective measure in addressing the ever-widening Balance of Payments deficit.

According to LMD, over half the respondents feel the economy would improve over the next 12 months, whereas only 36 percent said so in November. However, 34 percent still think the economic status quo would remain, while 15 percent fear it would worsen.

Sixty percent of businesspeople surveyed also said that business prospects would improve in 2016, while 28 percent envisage no change and 12 percent think sales volumes would dip.

However, the magazine says that “the fallout from the budget is beginning to take a negative turn,” while accepting the possibility of “a possible erosion in business confidence in the short term.”

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