Rise Of Inflation And Other Negative Factors Has Decreses The Economic Expectation

Perceived Economic Opportunity PEO: March, 2017   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 March 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 March 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 decreased compared to February 2017.   The expectations in terms of job prospects of people or developing the status of their business shows a positive trend in the month of February 2017 compared to the month of January 2017.   It is a significant status as the same expectation showed a continuous increase from December 2016 to February 2017.   The same expectations were increased to 12 percent in the month of November and stabilized at same in the month of 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 to 8.6 percent in March 2017 from 8.2 per cent in February 2017, on year-on-year basis.   Meanwhile, external sector showed a slower growth atmospheredue to the expansion of the trade deficit in February 2017, declined tourism earnings and moderate growth of remittances.   Close down of the Bandaranaike International Airport during the daytime to repair the runway may also have caused the lower earnings of the tourism sector. Export earnings decreased by 2.7 per cent to 868 million dollarsin the month of February 2017 compared to the month of February 2016. The International Monetary Fund was quoted in March saying, that it would encourage to tighten monetary policy, if the inflation and credit growth does not decrease in Sri Lanka.   In light of this, the Central Bank of Sri Lanka decided to increase the key policy interest rates of the Central Bank in the month of March 2017. The Colombo stock exchange also showed a downturn during the first three months of the year. 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. 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 March 2017. Refer the graph below; ABILITY TO SAVE According to the analysis in the month of March 2017, expectation among the people to save a little more from their personal earnings in the ensuing 12 months had shown a continuous decrease. The same was shown a decrease in the month of February as well.  The same was shown a decrease in the month of January 2017 compared to the month of December 2016. The reason for the decline is most likely the growing inflation in Sri Lanka. (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, the survey showed.   However, the expectation showed an increase in the month of January 2017 likely due to the reason as Sri Lanka appointed a Special Presidential Commission of Inquiry to investigate the controversial Central Bank bond issue and recommend action in the same month.   The expectation for reduction of corruption showed an increase in the month of February 2017 but it is observed that the same expectation shows a decrease in the month of March 2017.   (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.