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MONTHLY ECONOMIC UPDATE - JUNE 2019

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3 KEY INSIGHTS

  • Sri Lanka recorded a 3.7% growth in Q1- 2019, mainly contributed by the Services activities.

  • Global growth was forecasted to weaken to 2.6% in 2019 due to heightened tensions and subdued investments.

  • Global Oil prices jump in June due to fall in inventory and US-Iran tensions; Gold at a six-year high

 

Sri Lankan Economy

Improved Economic Growth in Q1-2019: Sri Lanka recorded an economic growth of 3.7% on a y-o-y basis, which is lower than 4% registered at the same quarter of 2018, but higher than the 1.8% recorded in the previous quarter. Growth was mainly driven by the services sector followed by industry and agriculture sectors respectively.

Trade Deficit Narrowed Remarkably: Due to a considerable reduction in imports, the trade deficit narrowed by 20% in April 2019 compared to the same period last year. April 2019, marked the sixth consecutive month where imports contracted on a y-o-y basis.

Sri Lanka Offered USD 2 Bn Worth ISBs: With the purpose of capitalizing on the conducive market backdrop, the government offered USD 2 Bn worth ISBs recently, and this marked Sri Lanka’s 14th USD benchmark offering in the International Bond Market and country’s second transaction in 2019. State-run Sri Lankan Airlines also sold a USD 175 Mn dollar bond in the previous week.

Credit to the Private Sector Contracts: Private sector credit growth contracted in April 2019 with the y-oy- growth falling into single-digit level.

 

 

Global Economy

Global Growth to Weaken to 2.6% in 2019: The World Bank forecasted a 2.6% growth for the World in 2019. Their forecast made in January 2019 was revised downward in June by 3 percentage points due to heightened tension and subdued investments. However, the growth outlook for South Asia seems solid, with growth picking up to 7% in 2020 and 7.1% in 2021.

Oil Prices Jump: Oil price has risen from the second half of June on the backdrop of over declining stocks and USIran tensions.

Gold Prices Picked up to Six-Year Highs: Prices of gold rose above USD 1,400 in June which is a six-year high for the metal. This robust growth of price was driven by dovish signals from global central banks and increased tensions between the US and Iran. Gold prices have risen 7.7% so far June 2019, and more than USD 70 just over the third week of June.

 

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The Ceylon Chamber of Commerce

Economic Intelligence Unit

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