Sri Lanka private consumption explains gap between GDP and reality: economist

May 29, 2014 (LBO) – Sri Lankan firms are experiencing a downturn, despite apparently high gross domestic product growth last year due to weak domestic consumption growth, an economist said. Amal Sanderatne, head of Frontier Research, an economics consultancy said their clients are asking why demand is weak when Sri Lanka registered the second highest economic growth numbers in Asia at 7.3 percent last year.

“We had very strong GDP growth last year in 2013 in particular, in the second half, an acceleration of GDP growth,” Sanderatne told a forum organized by DFCC Bank’s Treasury division in Colombo.

“But generally across the board, a lot of people catering to the domestic economy – a lot of our clients – keep talking about very subdued demand conditions. That consumer demand is very low, sales are very low.

“You see this in a lot of listed corporates that are servicing the domestic consumer, you know that profits are down, non performing loans are rising.

“So there is this big divergence between what you see in GDP growth and what people experience in actual business conditions generally.”

Sanderatne said the divergence between actual business conditions and GDP n

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