THE ECONOMY
UNCERTAIN ECONOMIC FRONTIERS
Corporates are cautiously optimistic while bracing for the challenges that lie ahead
The New Year is ushering in an atmosphere of uncertainty for businesses, all but clouding hopes of a return to normalcy. That said, there’s an apparent sense of cautious optimism amid the anxiety, according to the outcome of the latest LMD-PEPPERCUBE Business Confidence Index (BCI) survey.
The focus is also on meeting crucial IMF deficit targets.
So Sri Lanka finds itself at the economic crossroads with arguably the most difficult hurdles being to meet its ambitious goal of achieving a revenue target of 13.3 percent of GDP while reducing public debt to 108.5 percent thereof.
THE ECONOMY Despite the prevailing uncertainties, 21 percent of poll participants say the economy will ‘improve’ in terms of the economic outlook for the next 12 months. This represents an increase of 13 points compared to the preceding month of November (8%).
And in December, 22 percent anticipate the economy to ‘stay the same,’ surpassing the 19 percent recorded in the preceding month. Meanwhile, there’s a shift in sentiment given the 57 percent who believe the economic situation will ‘get worse’ – a substantial decrease of 16 points from November (73%).
SALES VOLUMES There’s an uptick in optimism regarding anticipated improvements over the next 12 months for sales volumes.
Twenty-seven percent of respondents are confident that sales volumes will ‘get better,’ which is a four point increase from November. Additionally, over one in four respondents (27%) believe their numbers will ‘stay the same,’ compared to the previous 23 percent.
And the proportion of executives expecting sales volumes to ‘get worse’ has fallen to 46 percent, down from 54 percent in the prior month.
Furthermore, 29 percent of poll participants disclose ‘increased’ sales volumes over the past 12 months, marking a surge of 18 points from November. In contrast, 13 percent indicate that their numbers ‘stayed the same’ while 58 percent report a reduction – from 77 percent.
Looking ahead to the next three months, there’s a positive outlook regarding sales volumes ‘getting better’ with 26 percent saying so. This is a significant increase from the 14 percent recorded in the previous month.
Meanwhile, a quarter (25%) believe that sales volumes will ‘stay the same’ – that’s a drop of 12 points from November.
However, the overall sentiment is muted with nearly half (49%) of those polled expecting their sales to ‘get worse’ in the next three months, aligning with the findings in November.
INVESTMENT CLIMATE For the first time in five consecutive months, two percent express optimism about the investment climate being ‘very good.’
And following a trend of none in the two preceding months, 12 percent now say it’s ‘good.’
However, a large majority of executives (70%) still view the investment climate as being ‘poor’ or ‘very poor.’
Regarding employment prospects, staff retention and downsizing, there’s good news as more than three in 10 (31%) say they intend strengthening their workforce – a notable rise from the previous month (28%).
And while 57 percent plan to maintain current staff levels, 12 percent expect to downsize over the next six months.
