Boston, MA -- (SBWIRE) -- 06/16/2014 -- Core Views:

- We have upgraded our 2014 real GDP growth forecast to 7.1%, from our previous estimate of 6.8%, as we expect the country's manufacturing and services sectors to maintain their strong performances in 2014.
- We believe that the successful passage of the United Nations Human Rights Council's (UNHRC) third resolution will neither hurt the political stability in Sri Lanka nor derail its economy. We therefore maintain our short-term political risk rating for the country at 77.1 out of 100 and our 2014 real GDP forecast of 7.1%.
- We maintain that the Central Bank of Sri Lanka (CBSL) will keep its standing lending facility rate and standing deposit facility rate unchanged at 8.00% and 6.50% respectively over the course of 2014, as inflation will remain relatively subdued and the strong economic growth momentum seen in 2013 will likely continue this year.
- We continue to expect the Sri Lankan rupee to remain fairly stable against the US dollar over the course of 2014, as the improvement seen in the external accounts for 2013 will likely continue this year, while the central bank continues to build up reserves. We are forecasting the currency to trade within LKR130.00-131.50/US$, and the current account deficit to narrow to 3.5% of GDP in 2014.
- We believe that the pace of fiscal consolidation in Sri Lanka will remain slow, as we expect the impact of ongoing tax reforms to remain marginal, and see a substantial reduction in government expenditures as unlikely.

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Major Forecast Changes

- We have revised our 2014 real GDP growth forecast to 7.1%, from our earlier projection of 6.8%.
- We have upgraded our 2014 current account forecast to -3.5% of GDP, from -5.0% previously.
- We are projecting the budget deficit to narrow further to 5.4% of GDP, from our previous estimate of 5.8%, owing in large part to rapid real GDP growth in the country.

Key Risks To Outlook

- Risks To Current Account Deficit: A flare-up in sovereign risk in the EU could quickly...

The Sri Lanka Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Sri Lanka and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Sri Lanka's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

- Forecast the pace and stability of Sri Lanka's economic and industry growth through end-2017.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.

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