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MONTHLY ECONOMIC UPDATE - SEPTEMBER 2019

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3 KEY INSIGHTS

  • Q2-2019 GDP growth slows to a five-year low

  • The Ceylon Chamber publishes Sri Lanka Economic Acceleration Framework 2020-25

  • OECD cuts growth outlook to decade low; Oil prices volatile after attack on Saudi production facilities

 

Sri Lankan Economy

Growth Slows to 1.6% in Q2-2019: Sri Lanka’s GDP expanded by 1.6% during Q2- 2019, While this is the lowest quarterly growth recorded since 2014, it was mainly driven by the negative impacts of the 21st April attacks with all three major sectors growing under 2%. 

CBSL Orders Banks to Reduce Interest Rates by 2%: The CBSL recently ordered all licensed banks to slash interest rates by at least 2% by 15 October 2019, to offset a steep slowdown in private sector credit and growth of non- performing loans.

Ceylon Chamber Launches 2020-25 Economic Acceleration Framework: The Ceylon Chamber of Commerce launched a working draft of its 2020-25 Sri Lanka Economic Acceleration Framework, which focused on re-calibrating Sri Lanka’s economic trajectory. It is now available at www.seaf.chamber.lk and open for feedback from the public.

Recovery in Tourism Arrivals post 21st April Attacks: In August 2019 tourist arrivals reached 143,587 arrivals, a significant rise compared to the preceding three months following the 21st April attacks. Arrivals for the first eight months of 2019 fell by 20% compared to 2018. 

LKR depreciates since August 2019: The LKR (spot) against the USD has depreciated by 2.9% since the start of August owing to outflows in the government securities market and global volatility. Despite the recent depreciation, the LKR has appreciated close to 1% for the year so far.

 

Global Economy

OECD Cuts Growth Outlook to Post-Crisis Low: OECD slashed its growth forecasts owing the trade war between the US and China. OEDC expects the global economy to grow at 2.9%, the slowest since the 2008-2009 financial crisis.

Oil Prices Volatile after Attacks on Saudi Facilities: The week following the attack on the Saudi production facilities saw a 6.7% jump in Brent oil prices, its largest weekly rise since January 2019. Concerns over energy demand since then has seen a recovery in prices.

US Fed Cut Interest Rates Again: The Fed cut its interest rates for the second time in 2019 as it looks to stimulate the US economy and get inflation closer to the Fed’s target of 2%.

Global Services Trade Expected to Weaken in 2H-2019: World trade in commercial services lost momentum through the Q2-2019 and is expected to weaken further into the second half of 2019 according to the World Trade Organisation (WTO).

 

Read Full Update

The Ceylon Chamber of Commerce

Economic Intelligence Unit

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