Many corporates believe Lankan economy would stabilise:MTI survey
View(s):Some 52 per cent of the respondents of an MTI Consulting survey of top CEOs believe the Sri Lankan economy would stabilise.
However a significant 25 per cent expect the economy to decline (given all the different global and challenges that they have indicated throughout the study), according MTI second consecutive CEO Business Outlook Survey.
The 2013 survey covered 150 CEOs, up from 100 that was covered in the 2012 Business Outlook Survey.
Highlights of the results:
n A significant 53 per cent of the respondents felt that the business environment for their respective industries/domains was below what they had expected at the beginning of the year. This was also evident by the corporate earnings of companies that depend on local markets sales – they were faced with increased imported input costs, and mid-tier exporters relying on the EU and North America. One third of the respondents felt their businesses met their expectations set for 2012. Companies related to tourism, construction and infrastructure seemed to have performed relatively better.
n Similarly surveys in 2010-11 showed extremely high corporate confidence (linked to the post-war economic syndrome). “Therefore, arguably the expectations they had for 2012 could have been an extension of the ‘bull run’ that many industries experienced in 2010-1,” the survey results released to the media, said.
It said, “We cannot expect an extension of the 2010-11 growth rates without an increase in retail consumption and that can only come if real consumer buying power increases at the bottom of the pyramid. This in turn requires real growth in economic activities”.
“60 per cent of the respondents expect the global economy to remain depressed, while 5 per cent believe it will further slide; 32 per cent are however hopeful it will recover, the keyword being hopeful! All indications from the Euro Zone is that markets will remain depressed as the austerity measures will continue to check retail consumption, while Government spending on capital expenditure will continue to be at very low levels,” MTI said.
The survey noted that the much talked about ‘Fiscal Cliff’ in the US will determine how consumer confidence will shape up and consequently on retail consumption. This means countries like Sri Lanka that are highly dependent on their exports to the North Atlantic region will be under pressure for export revenues. Of equal concern for Sri Lankans is turmoil in the Middle East and its impact on tea exports and foreign remittances from migrant workers.
“Unlike in our survey in 2011, there was more pronounced expressions of four major economic challenges that CEOs felt need serious attention and identified as the ones that significantly impact their own business performance. They are – the widening balance of payment, governance (some saw this extending to corporate governance), inflation (and its impact on the cost of living and consequently on retail consumption) and lack of concerted effort of exports and FDIs. The profitable growth of the tourism sector, the expansions of construction activity and the ambitious infrastructure developments were all considered in positive light,” it said.
Almost half (52 per cent) of the respondents expect their businesses to record higher growth in 2013, while 36 per cent expect the same growth they experienced in 2012.
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