Perceived Economic Opportunity optimism at its lowest since July 2011

The Perceived Economic Opportunity Index (PEOI) recorded its lowest level in January since its inception in July 2011, according to its compiler Foundation for Economic Freedom in Sri Lanka (FEESL).

 It said the fall of the Index was an extension from the previous month after the welcome post-budget upward movement in November. At 1.57, the index has now moved significantly below the midpoint of 2.0 and very much in to the relatively pessimistic territory.

Even though not ascertained in the standard questionnaire the finality in the impeachment of the Chief Justice that generated widespread condemnation of the process could well have been the major reason for the dramatic downward movement of the PEOI.

Economic news that the economy only grew by under 7% last year with prospects for the new-year also low as well as the fact that inflation has risen to almost double-digit level could have contributed in all likelihood.

The perception on corruption is also something that has continued to get worse over the period of the survey. At last count as high as 90% of those interviewed believed corruption had increased compared to six months ago. This is perhaps another reason that is killing optimism.

The PEOI is calculated on a monthly basis using a random sample of 100 persons based on seven questions: one each on income, saving and cost of living; one each on law and order, media freedom and corruption; and one question on opportunities to advance in the respondents job, profession or entrepreneurial activity.

The answers can only have three possibilities; the current situation with regard to each issue is worse than it was six months ago, the same or better than six months ago.



A score of 3 is that Sri Lankans are becoming relatively more optimistic about the emerging opportunities while 1 is they are becoming relatively more pessimistic. A score of 2 indicates no change. Therefore, the trend is a more important indicator of changing perceptions than the absolute number.

The Perceived Economic Opportunity Index was developed and is measured by the Foundation for Economic Freedom in Sri Lanka in partnership with Friedrich Naumann Stiftung Fur Die Freiheit. Fieldwork is carried out by market research agency PepperCube Consultants.