Perceived Economic Opportunity PEO: January, 2017

Expectation On Ability To Save Decreses Despite The Upward   Trend Of Expectation For Reduction Of Corruption  With The Establishment Of A Special Presidential Commission To Investigate The Central Bank Bond Issue   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 January 2017 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 January 2017 indicates that the expectations in terms of job prospects of people or developing the status of their business, shows a positive trend in the ensuing 12 months. The expectations on the same were stable in the month of December 2016 compared to the frequently changing behaviour of the economic expectation in the past months. The same expectations were increased to 12 percent in the month of November and stabilized at same in the month of December 2016. Expectations in terms of job prospects of people and developing the status of their businesses were increased to 14 percent in the month of January 2017. The Government of Sri Lanka’s Hambantota port project which will form 2400 new factories has shown a progress in the past months. It was also reported that the Managing Director of the International Monetary Fund, advocated in favour of the economic policies of Sri Lanka in January. However, a report published by Bloomberg in January, ranked Sri Lanka as among the world’s high risk countries for investments based on 29 indicators which include political and economic factors. Meanwhile, on 11th of January, the European Union officially announced that it will again provide the Generalised scheme of preferences (GSP), a tax concession, to Sri Lanka.  The government believes that this concession will be given by the month of May 2017. Sri Lankan rupee depreciated nearly 0.1 percent against the USD during the first 10 days of the year 2017, Central Bank data shows. 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 a year-on-year basis. But, the inflation showed a significant increase to 5.5 per cent in the month of January 2017. 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. Sri Lanka’s external sector  showed a mixed performance in the month of December 2016. On the external front, the trade balance widened further in the month of December, 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 December 2016. Export earnings in the month of December 2016 have increased by 4.7 per cent to 859 million dollars compared to the month of December 2015. 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 January 2017. ABILITY TO SAVE According to the analysis in the month of January 2017, expectation among the people to save a little more from their personal earnings in the ensuing 12 months had shown a significant decrease. The growing inflation may have impacted mainly on this.  The expectation which was increased by 15 per cent in the month of December 2016 decreased to 11 per cent in the month of January 2017. 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   likely due to the much publicized issue of the probe by the Parliamentary Committee on Public Enterprises, or COPE. The same was continued in the month of December 2016. However, the expectation showed an increase in the month of January 2017.Sri Lanka appointed a Special Presidential Commission of Inquiry to investigate the controversial Central Bank bond issue and recommend action in the same month. (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.