The Ceylon Chamber of Commerce (CCC) recently launched the 8th edition of its flagship annual Outlook Report for 2023 at the Economic Outlook 2023 seminar. The Report was launched in the presence of Dr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka who delivered the keynote address.
Compiled by the Economic Intelligence Unit (EIU) of the Ceylon Chamber, the report covers the outlook for key variables such as growth, inflation, interest rates and exchange rate which are vital for business planning.
This year, the theme for the report is ‘Turmoil to Progress: Staying the Course” which looks at 10 key themes that are likely to play out during 2023. The Report reviews the performance of the global economy, analyses regional economic growth and provides perspectives on the outlook for sectors such as Banking, Tea, Apparel, Manufacturing, IT/BPM, FMCG, Agriculture, and Tourism.
Presenting the Outlook Report, Chief Economist of the Ceylon Chamber, Shiran Fernando drew attention to 10 key themes. Economic growth is expected to fare much better in 2023 compared to the steep contraction in 2022.
The slowdown witnessed in 2022 will likely continue into the first half of 2023 in particular with consumption easing further with the higher tax regime.
However, the EIU expects consumption to bounce back in the second half with a lower interest rate environment coupled with stability in terms of prices for goods and services. Sectors such as agriculture and tourism will also do better in 2023 while exports and investment are two key levers for growth in 2023.
The presentation of the Report further highlighted that while inflation is to trends downwards to between 10-20% towards the last quarter of 2023, the EIU expects to see firms adopt a shrinkflation approach where they may not necessarily increase prices of goods and services but the composition/size
may be adjusted to stay in line with costs.
The disinflationary environment will also see interest rates fall during the year. The stability of the currency hinges on the outcome of the IMF program which can potentially unlock further financing from multilateral partners.
However, any delay beyond the 2 nd quarter of 2023, to obtain IMF Board approval, could put the currency under pressure in particular if
imports rise accompanied by a sharp slowdown in exports.
Global growth slowdown and how it could potentially disrupt economic recovery with a slowdown in exports, was also highlighted. However, the EIU believes an increase in remittances and tourism inflows could compensate for this drop.
The Chief Economist highlighted the need to prioritise reforms in this narrow window of opportunity and implement the much delayed structural reforms that would drive sustainable growth. Concluding the presentation, he remarked that 2023 should be the year of focusing on low-hanging fruits in the reform agenda and setting the stage for larger and more complex reforms.
Panelists at the webinar were Aruni Goonetilleke – Chairperson, HNB PLC, Yohan Lawrence- Secretary General of the Joint Apparel Association Forum, Shiromal Cooray- Chairman, Jetwing Hotels Ltd, Chairman & Managing Director, Jetwing Travels (Pvt) Ltd and Dr Roshan Perera – Senior Research
Fellow, Advocata Institute. The panel discussion was moderated by CCC CEO and Secretary General Manjula de Silva.