Sept 28, 2016 (LBO) – Sri Lanka’s second quarter economic growth for this year should be higher than the published 2.6 percent, Central Bank Governor said.
Governor Indrajit Coomaraswamy told reporters in Colombo that he would expect it to be higher than the current figure, once it gets revised.
“If you look at proxies for growth like availability of cement for the construction sector, electricity consumption and credit growth, economic growth may not have slowed down as much as 2.6 percent,” Governor said.
“Credit is growing at about 25 percent in the second quarter and inflation was low at that time. So you can’t have high credit growth, low inflation and low growth. The money has to go somewhere,” he said.
“So, there are chances that figure is revised upwards.”
Coomaraswamy further expected the third and fourth quarters to record more growth than last year’s numbers as he sees an upward movement in business confidence.
“We are seeing a pick up in the Purchasing Managers’ Index (PMI) and business confidence,” he pointed out.
“But most of all, the tailwind for growth for the second half will be the very positive base effect stemming from the very low growth rate recorded in the fourth quarter of last year.”
Governor said since fourth quarter growth was only 2.5 percent last year, that will give a positive base effect for this year.
“It should mean that we will get a decent growth number for the fourth quarter of this year.”
“So our expectation is that this year’s growth would be about 5 percent or little bit more than that and next year it will be a bit higher than that.”