Foreign inflows on the rise; $ 537 m in FDI by June
Monday, 19 August 2013 00:00
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The Central Bank last week said that foreign inflows are on the rise, with foreign direct investment worth $ 537 million received by end-June.
“Notable inflows to the financial account include FDI inflows amounting to $ 537.0 million, net inflows to the stock market of $ 120.2 million, net inflows to the Government securities market amounting to $ 664.4 million and inflows to commercial banks of $ 664.3 million during the period. Such inflows display that foreign investors’ confidence in Sri Lanka has remained unchanged despite the volatility caused by global markets reacting to prospects of the tapering of quantitative easing by advanced economies,” the Central Bank said in its statement following the August Monetary Policy review.
It also said that in the external sector, merchandise exports in June 2013 have showed some turnaround, recording a positive year-on-year growth after the decline observed in the past 15 months. Meanwhile, imports have also inched up in June (year-on-year), driven partially by the importation of certain one-off items, expanding the trade deficit during the month.
However, the cumulative performance in merchandise trade depicts a salutary 7.1% decline in the trade deficit for the first six months of 2013. Earnings from tourism and workers’ remittances have continued to improve, whilst financial inflows have been substantial in the first half of the year.
Central Bank stated that the recent global developments have been reasonably encouraging with the US economy and the Eurozone showing signs of economic recovery in the second quarter of the year.
“The positive developments in advanced economies, if continued, would augur well for domestic economic growth as a result of a stronger performance of the external sector. At the same time, however, the wide fluctuations of currencies of trading partners and competitors in the international market would need to be closely monitored in order to address any adverse effects on Sri Lanka’s external balance in the period ahead,” the Central Bank added.
