2014 seems better year for business, says top Lankan chamber
View(s):Sri Lanka’s business community is anticipating a better year for business in 2014, the Ceylon Chamber of Commerce (CCC) said on Monday.
“There are a number of factors that point to a more positive outlook both at home and abroad. Inflation is in mid-single digits; the trade and current accounts of the balance of payments have improved; the growth impetus in the economy has picked up in 2013 and is likely to continue. All this is likely to have a positive impact on corporate top and bottom lines in 2014,” the chamber noted.
The CCC said it was encouraging that the authorities have demonstrated resolve in pursuing fiscal consolidation. The burden of adjustment falling on recurrent expenditure, while capital expenditure is protected, is a favourable development.
“The CCC would, however, urge that priority is attached to increasing education and health expenditure through a combination of a stronger revenue performance and greater recourse to private provision. The government’s continued focus on infrastructure development is to be commended. It boosts the growth potential of the economy and opens up opportunities for Public Private Partnerships (PPPs),” it said.
The CCC noted that the adjustment of electricity and fuel prices has strengthened macroeconomic conditions by improving the balance sheets of the state banks and creating more space for private sector credit. The relaxation of monetary policy has generated a greater impetus to economic activity with private sector credit picking up in second half of 2013.
“We would, however, suggest a note of caution regarding further monetary accommodation as the output gap closes and yield differentials between Sri Lankan and US treasury instruments decline as the Fed unwinds the QE3 program,” it added. The chamber said that the recovery in the US, the upturn in Europe and the anticipated stability in oil prices create an improving external environment for the country. It is also a source of comfort for business that the authorities have been proactive in building up reserves to $8.2 billion to provide a cushion against any adverse effects of Fed tapering linked to the recalibration of risk in relation to emerging markets, it said.
The CCC was also looking forward to the completion of the FTA (free trade agreement) with China. “The two FTA’s with China and India, combined with the proposed commercial hub legislation are potential game changers for the development prospects of the country. The CCC looks forward to working with the relevant authorities to fulfill the potential of these transformative opportunities,” it said.