Business confidence down

Despite Prime Minister Ranil Wickremesinghe’s recent statement on the economy, wherein he outlined numerous reforms to be introduced over the next two years, the business community apparently remains unconvinced about the local economy’s potential. 

This is evidenced by the latest LMD-Nielsen Business Confidence Index (BCI), which fell to 152 basis points, to below its 12-month average of 163, ahead of the 20 November budget presentation.

Nielsen’s Managing Director Shaheen Cader pegs the BCI’s continued decline to “concerns about the ability of economic growth to be sustained at current levels,” and says that this is “despite sustained optimism, in terms of current and future business performance.” 

Cader also says that apprehensions about the economy seem to have arisen due to “increasing concerns about sleaze in politics, recent tax increases (on vehicles) and the depreciation of the rupee.” According to LMD, a majority of respondents (46%) feel that the economy will stay the same, while 36 percent are hopeful that conditions would improve over the next 12 months. 

As for biz prospects, optimism appears widespread among businesspeople, with nearly 60 percent of respondents to the exclusive monthly expecting an improvement in sales volumes over the next 12 months, while only eight percent have a negative outlook, LMD reports.

A spokeswoman for the pioneering magazine notes that “respondents are optimistic about the immediate future as well, with a 50-plus percent majority expecting their business prospects to improve in the short term.”

LMD states: “Trying conditions on the external front and governance concerns are also on the radar of the corporate community,” which may “undermine business confidence in the near term.”

Media Services, the magazine’s publisher, says that the December edition of LMD has been released to bookstores and supermarkets (for the full BCI report, go to www.LMD.lk).