Confidence in economic opportunity not picking up

Tuesday, 25 February 2014 00:38 - - {{hitsCtrl.values.hits}}

The boost in confidence that came along with the CHOGM and the 2014 Budget was short lived according to the Perceived Economic Opportunity Index (PEOI) measured by the Foundation for Economic Freedom in Sri Lanka. FEFSL said the dip in the index in December put paid to the expectation that the uptick was the start of a sustained increase in the perceptions of the economy. “However the slight increase for January brings new hope,” it added.

“Whether this upward movement is a starting point of a rally or not could only be assessed in a few months’ time. However, questions have arisen as to whether the increase in the combined loan book of banks that is required to sustain the forecast growth is taking place, particularly given the low interest rate regime currently prevailing,” FEFSL said. “Low interest rates alone cannot push investments and growth. Confidence is a key factor. The fact that the index has not been able to cross the threshold of 2 for a long period is a serious concern in this confidence factor. Why this is must be found out and addressed,” it added. The Perceived Economic Opportunity Index (PEOI) is calculated on a monthly basis using a random sample of 100 persons based on seven questions: one each on income, saving and cost of living; one each on law and order, media freedom and corruption; and one question on opportunities to advance in the respondents job, profession or entrepreneurial activity. The answers can only have three possibilities; the current situation with regard to each issue is worse than it was six months ago, the same or better than six months ago. A score of 3 is that Sri Lankans are becoming relatively more optimistic about the emerging opportunities while 1 is they are becoming relatively more pessimistic. A score of 2 indicates no change. Therefore, the trend is a more important indicator of changing perceptions than the absolute number. The PEOI was developed and is measured by the Foundation for Economic Freedom in Sri Lanka. Fieldwork is carried out by market research agency PepperCube Consultants.

Public debt tops Rs. 6.8 trillion

The country’s outstanding Government debt has crossed the Rs. 6.8 trillion mark as per latest data released by the Central Bank. The Rs. 6,800.4 billion figure was as at end September 2013, up by Rs. 632 billion 10% from a year ago. Foreign debt amounted to Rs. 2.97 trillion, up by 3% from September 2012.