Earnings from tourism up by 18 % in Jan-Dec 2015, CB says
View(s):Earnings from tourism in January to October are estimated to have grown by nearly 18 per cent, strengthening the external current account, while workers’ remittances recorded a moderate growth of 1.8 per cent in the first nine months of the year, the Central Bank (CB) said this week.
Gross official reserves, which stood at US$ 6.8 billion at end September 2015, are estimated to have growth to around $8 billion by 3th November 2015 with receipts from the ninth International Sovereign Bond issuance of $1.5 billion. The Sri Lanka rupee has depreciated by 8.1 per cent against the US dollar so far in 2015.
These comments were made in the CB’s monthly assessment of the economy, issued this week, along with the decision that current interest rates would remain as it is. Interest rates have remained unchanged for many months now contrary to expectations and calls by economists for it to rise to plug rising consumerism particularly of non-essentials.“The Monetary Board, at its meeting held on 24 November 2015, was of the view that the current monetary policy stance of the Central Bank is appropriate. Accordingly, the Monetary Board decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively,” it said in the statement.
Headline inflation, as measured by the Colombo Consumers’ Price Index, increased to 1.7 per cent on a year-on-year basis in October 2015 from negative 0.3 per cent in September 2015 mainly reflecting the dissipation of the impact of the downward revision of administered prices during the latter part of 2014. “On an annual average basis, headline inflation remained unchanged at 0.7 per cent in October 2015. However, reflecting the firming up of aggregate demand conditions in the economy, core inflation continued to increase during last eight months reaching 4.4 per cent in October 2015, on a year-on-year basis, compared to 3.2 per cent recorded at end 2014,” the CB release said.
On November 23, the Department of Census and Statistic (DCS) released a National Consumer Price Index covering price movements in all provinces in the country. The CB said the movements of the NCPI are broadly in line with the movements in CCPI, which only covers the urban areas of the Colombo district. Headline inflation as per the year-on-year change in NCPI was at 3 per cent for October 2015.In the monetary sector, the year-on-year growth of credit granted to the private sector by commercial banks increased further to 22.2 per cent in September 2015 from 21.3 per cent in the previous month.
“With regard to the external sector, the decline in expenditure on imports in September 2015 was greater than the decline in earnings from exports, narrowing the deficit in the trade account by 4.1 per cent to $733 million. However, on a cumulative basis, the trade deficit widened during the first nine months of the year by 3.8 per cent to $6,145 million, driven by the continued increase in non-oil imports. Recent policy measures taken by the Central Bank and the government coupled with policy measures announced in the Budget for 2016 are expected to curtail certain imports, particularly motor vehicles, thereby easing the pressure on the external sector,” it said.