Confusing economic signals force firms to delay investment
Companies are rethinking their investment plans in the near future due to mixed signals amidst an uncertain environment. Impending elections and lethargic government mechanism have cost companies’ bottom lines both of which have compelled many of them to set aside their growth plans, officials said.
A CEO of a manufacturing firm that is publicly listed told the Business Times that confusing signals and even confusing candidates (for the presidential elections in a few months) are making the economic environment uncertain. “We are trying to re-strategise our immediate plans. We cannot make decisions in this environment.”
Another CEO of a manufacturing firm noted that they are awaiting post-election to go ahead with investment plans. “Similar to many other firms, we will wait and see what happens,” he said. A manager of a firm dealing in modern trade noted that the company’s core customers were ‘under a lot of pressure’ and ‘running out of money’ at the end of the month to buy basic items—even more so than one year ago.
As opposed to all this, analysts say that Sri Lanka is at such an attractive and low base for investment. The stock market is at attractive valuations, the productivity is high in firms and the trade war between US and China is helping exports but the only thing that needs to be sorted is the fiscal issue, they added.
But structural changes in financial markets that throw up confusing market signals are an annoying additional challenge. And those signals have been particularly confusing over the past few months, analysts say.
Many others in management positions of both listed and unlisted firms noted that subdued industrial growth and widening trade deficit will further slow down economic growth.