Perceived economic opportunity optimism dips sharply in Dec.

The Perceived Economic Opportunity Index (PEOI), having seen a welcome post-Budget upward movement in November, saw a significant fall in December to a nine-month low of 1.66, according to its compiler the Foundation for Economic Freedom in Sri Lanka (FEFSL).

“Perhaps the major reason for the sharp fall in optimism could have been the impeachment battle of the Chief Justice, where the majority of lawyers of the Bar Association of Sri Lanka, civil society activists and the Opposition were flaying the Government for not following accepted procedure while the Government was steadfastly defending its action. Even though the actual impeachment took place in January, the fallout seems to have begun in December with the beginning of the process,” it said.

“Notwithstanding the reason for the most recent fall, the fact remains that the PEOI has been stuck in the ‘relatively pessimistic’ territory, below the midpoint of 2.0, since its inception in July 2011,” FEFSL added.

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.