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MONTHLY ECONOMIC UPDATE - NOVEMBER 2019

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3 KEY INSIGHTS

  • Trade Deficit Falls by USD 2.4 Bn in the first nine months of 2019; FDI drops sharply in the first half of 2019
  • New Bill on the Central Bank of Sri Lanka set to repeal the 70-year-old Monetary Law Act
  • WTO Expects Global Merchandise Trade to remain Below Forecast due to Rising Trade Tensions and Rising Tariffs

 

Sri Lankan Economy

Trade Deficit Contracted during First Nine Months: During the first nine months of 2019, the country’s trade deficit contracted by USD 2.4 Bn. The sharp fall in motor vehicle and gold imports and increase of exports of textile and garment contributed towards 58% of this decline in the deficit.

IMF Released USD 164 Mn under EFF: After completing the sixth review of Sri Lanka’s economic performance under the EFF, IMF approved the release of USD 164 Mn, bringing the total support so far to USD 1.31 Bn.

FDIs Drops Sharply in 1H: FDIs including foreign loans for projects approved by the BOI, decreased by 61.3% to USD 553.2 Mn during the 1H of 2019 and this contraction was mainly caused by a reduction in FDIs to infrastructure. BOI expects FDI for the full year to be at USD 1.5 Bn.

Government Published Draft Bill of Central Bank of Sri Lanka: The Government recently published the draft Bill of CBSL, which intends to replace the seven-decade old Monetary Law Act. The Bill includes provisions for CBSL to pursue inflation targeting, establish a macroprudential authority, and incorporate structural changes which would give greater independence to the Monetary Board.  You can access the draft Bill from here.

National Inflation hits a 2-year high: Nationwide inflation rose to 5.6%, a 2-year high on the back of an increase in the prices of food items. 

 

Global Economy

World Trade to Remain below Trend: he world merchandise trade is expected to remain below trend in the fourth quarter of 2019, reflecting heightened trade tensions and rising tariffs in key sectors.

OECD Warned on Global Economic Slowdown: OECD has warned that risks to the global outlook have increased. They forecast continued growth of around 3% but warns that the risks have increased.

Global Oil Prices Fell: The OPEC Reference Basket value declined by 3.9% on a monthly basis in October to settle at USD 59.91 per barrel. ICE Brent was on average 4.3% lower and NYMEX WTI was down by 5.2%. Oil prices are slightly higher in November responding to potential OPEC supply cuts. 

 

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The Ceylon Chamber of Commerce

Economic Intelligence Unit

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