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» Dividend Announcement
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» සතියක් තුළ දී ඒකක 90 කින් කොටස් වෙළෙඳපොළ පහළට. විදෙස් විකුණුම් තවදුරටත්
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» Obituary Notice.
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» PABC.N0000 (Pan Asia Banking Corporation PLC)
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» අනං මනං! #/+?.<>
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» Sri Lankan listed firms told to pay dividends directly to shareholder bank accounts
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» Sri Lanka's Hayleys group to sell assets to reduce debt
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» අපේ දුම්රිය සේවය තැබු ලෝක වර්තාව; වර්ජනයේ අරමුණ රුපියල් 11605 කින් පඩි වැඩිකර ගැනීම!
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» Sri Lanka’s Watawala Plantations June net down 57-pct
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» ඩොලරයේ වැඩිම විකුණුම් මිල අද වාර්තා වෙයි
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» Sri Lanka to miss IMF forex reserve target; seek waiver
Mon Aug 06, 2018 10:45 am by The Invisible

» Sri Lanka targets lower forex reserves for end 2018
Mon Aug 06, 2018 10:43 am by The Invisible

» Sri Lanka economy to grow 4.0-pct in 2018
Mon Aug 06, 2018 10:42 am by The Invisible

» More curbs on cars as Central Bank battles trade gap
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» What Sri Lanka can do to improve the credibility of its dollar soft-peg
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» Sri Lanka's Hayleys Fabric back in profit in June quarter
Sun Aug 05, 2018 12:11 am by spw19721

» Sri Lanka keeps rates unchanged
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» Sri Lankan shares end up 0.1-pct, foreigners buy NTB
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» Sri Lanka sharply raises tax on small hybrid cars
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» Sri Lanka inflation accelerates to 5.4-pct in July
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» බදු ඉහළට. Wagon R, Japan Alto, Spacia ඇතුළු පොඩි කාර් මිල වැඩිවෙන්නේ මෙහෙමයි
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» India police hunt eight men after sex attack on goat
Wed Aug 01, 2018 1:04 pm by slstock

» Yes, we Khan!
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» ඡන්ද කටේ ,කුලියාපිටියේ ඇදෙන Volkswagen කතාවේ ඇත්ත තත්ත්වය මෙහෙමයි
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» Should CSE be like this? Whose FAULT is it?
Tue Jul 31, 2018 8:24 pm by spw19721

» ලෝකය යා කරන චීන ඉදිකිරීම් වේගවත් කරන යෝධ යන්ත්‍ර
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» Happy Birthday
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» Whats ailing Sri Lanka ? Why we are what we are!
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» Lunar Eclipse
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»  Woman finds frog parts in her packet of 'kottu'
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Sri Lanka economy to grow 4.0-pct in 2018

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Sri Lanka economy to grow 4.0-pct in 2018

Post by The Invisible on Mon Aug 06, 2018 10:42 am

ECONOMYNEXT - Sri Lanka's economy may grow may be about 4.0 percent in 2018, Central Bank Governor Indrajit Coomaraswamy said, lowering an earlier forecast of around 4.0-4.5 percent.

"It’s unlikely that growth is going to be more than 4 percent this year," he told reporters Friday after holding policy rates.

The economy was expected to grow by about 3.4 percent in the first half of 2018, and will have to grow by 4.6 percent during the latter half of the year to reach 4.0 percent.

A recovery in the agriculture sector and related industries will help growth.

Coomaraswamy said there was a negative output gap, and real interest rates were also high, with inflation in mid single digits indicating space for a policy rate cut, but major central banks were raising rates and Sri Lanka may face capital outflows, prompting the monetary authority to hold rates.

The central bank triggered a minor run on the rupee by printing large volumes of money in March and April to enforce a rate cut, but conditions are now stabilizing, after short term rates rose.

Analysts have pointed out that the biggest problem in Sri Lanka is the tendency of the central bank's domestic operations department to inject cash into the banking system though sudden 'quantity easing' style exercises, which tends to de-stabilize the credit system and the currency peg.

Services and industrial sectors are also expected to expand, the Central Bank said in its monetary policy statement Firday.

"The economy is projected to reach its potential over the medium term benefiting from a competitive flexible exchange rate, a low inflation environment and a stronger policy framework to support exports and investment, amidst continued fiscal consolidation."

Last year growth fell to 3.2 percent, amid a credit slowdown and foreign reserve collections.

Coomaraswamy said there was a 'squeeze' on the economy from both monetary and fiscal tightening.

Sri Lanka is also expected to miss an International Monetary Fund reserve target for mid 2018, but will apply for a waiver.

The Central Bank collected over billion dollars of reserves in 2017, a practice which tends to dampen credit and growth, in general.

Analysts have pointed out that there is a credit recovery 18 months after the peak of the most recent balance of payments crisis. In the 2011/2012 crisis it took 26 months for credit to recover.

However this year there is an added dampener of a permanently depreciating currency which tends to kill domestic purchasing power and also generate political unrest.

Earlier this year, the Central Bank had expected growth to be around 4-4.5 percent. (COLOMBO, 3 August, 2018)
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