Sri Lanka’s GDP growth set to outpace peer economies: Asia Wealth

Monday, 10 September 2012 01:48 - - {{hitsCtrl.values.hits}}

Says foreigners likely to flood capital markets

Sri Lanka’s prospects of real economic growth for 2012E appear to be ahead of regional peer economies as well as that of world’s advanced nations, according to Asia Wealth Management.

It said latest projections made by IMF indicate Sri Lanka’s expected growth of 6.75% for 2012E is considerably higher against the growth forecast for Emerging and Developing economies of 5.6% for 2012E.

Advanced economies on the other hand are expected to grow lower at 1.4% against the world average of 3.5%. Further, projections for regional peer economies indicate Sri Lanka is well on its way to achieve highest rate of growth against South Asian Economies in 2012.

IMF projections indicate India’s growth to be at 6.1%, Pakistan at 2.6% and Bangladesh at 5.9% in 2012E. Further, the average growth forecast for Vietnam, Philippines, Indonesia and Thailand is 5.4%, well below that of Sri Lanka for the period.

“On the back of these higher relative prospects in a period where economic growth is expected to shrink generally across the world economies makes Sri Lanka one of the best bets in South and East Asian region and world in general,” Asia Wealth said.

“In the face of these positive developments, foreign interest in the Colombo Bourse and on overall capital markets in Sri Lanka is likely to further increase. The higher yields offered by government securities together with attractive valuations in the equity market in the midst of waning global prospects is likely to draw more foreign interest towards the economy,” it added.

Despite net earnings of the Colombo Bourse dipping 17% during the first half of 2012, Asia Wealth Management said foreign investors showed renewed interest in Sri Lanka’s equities.

“This indicates the fact that capital flows across national boundaries in the current global economic context will be shaped more by relative valuation of equity markets considering comparative growth forecasts for economies,” it added.