Economic Capsule - December 2015

Economic CapsuleDecember 2015

Research & Development Unit

228th Issue

C O N T E N T S

BANKING AND FINANCE

CBC Results for the 09 Months Ended 30.09.2015

Commercial Bank Branches go Green

Commercial Bank bags Gold for Best Annual Report in Banking Sector for 12th time

CBSL Hikes SRR by 150bp

ECONOMY & BUSINESS

Sri Lanka Maintains High Rank in Human Development Index

Economy Grows 4.8 % in 3Q, 2015

Sri Lanka Signs FDI Deals for Estimated US$ 1.6 bn in 2015

Sri Lanka Inflation Slows in December

Megapolis Plan Presented to President

Sri Lanka Launch Tourism Strategy 2016

INTERNATIONAL NEWS Fed Rate Hike 2016’s Global Wealth Forecast: The Economist

Condominium Industry in Sri Lanka

October, 2014


Banking & Finance

4< Research & Development Unit >

CBC Results for the 09 Months Ended 30.09.2015

Cont..


CBC Results for the 09 Months Ended 30.09.2015 (cont..)


Commercial Bank Branches go Green

Commercial Bank is already generating 40kW of solar power for its branches at Balangoda, Borella, Narahenpita and Maharagama, and will increase this figure to 240kW when the installation of solar power systems at the Kollupitiya, City Office, Main Street, Gampaha and Nugegoda branches is complete.

At least five more branches operating in buildings owned by the Bank are to receive solar power systems in 2016, under this programme.

Under the “Green Banking” programme, Commercial Bank has also invested a further Rs 36 mn on 20 more units of a new generation automated cash deposit terminal that completely eliminates the use of paper.

Commercial Bank’s environment-related initiatives have made steady progress in 2015 with the installation of solar power systems at four branches, the award of tenders for five more branch conversions, and the acquisition of 20 more paperless deposit machines.


Commercial Bank bags Gold for Best Annual Report in Banking Sector for 12th time

Best Annual Report (banking institutions) Edmund J. Cooray Memorial Trophy

Gold award for Management Commentary

Silver award for Corporate Governance Disclosure

Bronze award for the Best Annual Report overall across all sectors

Bronze award for CSR Reporting

Commercial Bank became the most-awarded Bank at the 2015 Annual Report Awards of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka)


CBSL Hikes SRR by 150bp

Central Bank increased the Statutory Reserve Ratio (SRR) applicable to all rupee deposit liabilities of commercial banks by 1.50 percentage points to 7.50 % to be effective from 16 January 2016.

According to CBSL, If the current excess liquidity in the domestic money market continues to remain high for an extended period, it could lead to an undue expansion in monetary aggregates, fuelling future inflation in the economy. In that respect, the Monetary Board is of the view that it is appropriate to restrain the build-up of demand-side pressure on inflation to ensure continued monetary and price stability.

Source: CBSL


October, 2014


Economy & Business


Sri Lanka Maintains High Rank in Human Development Index Sri Lanka has maintained its rank in the 'high human

development category' at 73rd place according to Human Development Report 2015 by the United Nations Development Program (UNDP).

According to the Human Development Index (HDI) monitored annually by the Human Development Report (HDR), Sri Lanka out of 188 countries has gradually improved in human development reaching 0.757 in the Human Development Index (HDI) in 2014 from 0.679 in 2000. The world average in 2014 is 0.711 and South Asia averaged at 0.607.

Source: UNDP

Source: UNDP


Economy Grows 4.8 % in 3Q, 2015 As per the new series, GDP recorded a growth of 4.8% in 3Q,

2015 led by the improvement in agriculture and industry sector activities.

Agriculture: Growth in agriculture continued to improve in 2015, partly reflecting output normalization after last year's drought.

Industry: Industrial activities improved by 6.2 % in 3Q, 2015 compared to the same period in 2014 supported by the improvement in the activities of manufacture of wood and products of wood and manufacture of machinery and equipment. However, the manufacture of textile and wearing apparel activities recorded a decline of 2.4% during 3Q, 2015 compared to 3Q, 2014.

Services: the Service activity, which is the highest contributor (57.1 %) to the total GDP, recorded a slight growth of 3.4% in 3Q, 2015 compared to the same period in 2014 led by the improvement in wholesale and retail activities.

Source: DCS


Sri Lanka Signs FDI Deals for Estimated US$ 1.6 bn in 2015

Sri Lanka's Board of Investment has signed agreements for foreign direct investments worth an estimated USD 1.6 bn in 2015, up slightly from last year, according to the BOI.

Among the agreements signed by the BOI in 2015 were three agreements with Dialog Axiata, Dialog Broadband Networks (Pvt) Ltd and Dialog Television (Pvt) Ltd for a total investment of USD 175 mn.

Another significant agreement signed by the BOI in 2015 was with Senok Automobile (Pvt) Ltd. to assemble Volkswagen automobiles in Sri Lanka, worth USD 26.5 mn.


Sri Lanka’s Inflation Slows in December

Sri Lanka's year on year inflation slowed to 2.8 % in December 2015, down from 3.1 % in November.

Prices rose 0.5 % during the month with the Colombo Consumer Price Index rising to 185.2 from 184.7 points.

Food price inflation slowed to 0.8 % during the month from 3.0 % in November.

Source: DCS


Megapolis Plan Presented to President

Sri Lanka’s President Maithripala Sirisena was presented with the new government’s Megapolis Plan formulated to develop the island’s Western Province.

According to Minister of Megapolis and Western Development, Sri Lanka will be able to get about USD 30 bn worth investments within next 10 years through this project.

The implementation of the development plan is to be carried out under three phases and will be completed by 2030.

The Megapolis Development Plan has identified issues that should be given priority in the town development – this includes traffic congestion, garbage disposal and housing facilities for slum dwellers as well as drinking water and sanitary facilities.


Sri Lanka Launches Tourism Strategy 2016

At this backdrop, the tourism promotional plan of year 2016 is formulated based on five key strategic objectives

Attracting a target number of 2.2 mn visitors with 26% annual growth, Increasing average daily expenditure of a tourist up to US$ 200, Increasing average stay and Contributing to generate a total tourism revenue up to US$ 2.75 bn

Sri Lanka Tourism has formulated a broad Strategic Marketing Plan for year 2016, with the participation of private and public sector stakeholders addressing long standing needs of the industry and the future expectations of the country as a tourism destination.

During year 2015 up to November , Sri Lanka Tourism recorded 18.1% growth on arrivals with 1.5 mn arrivals. The total tourism revenue generated was US$ 2.2 bn.

Cont..


Sri Lanka Launches Tourism Strategy 2016 (cont..)

Uplifting Sri Lanka’s brand value up to US$ 80 mn through tactical marketing campaigns focusing on main product offerings of the county will serve as the overall goal of the promotional strategy devised for 2016.

Positioning Sri Lanka as a venue for international and domestic events will be a key component of the 2016 marketing strategy.

Sri Lanka Tourism hope to stage internationally acclaimed tourism related events in Sri Lanka during next year such as Arugam Bay Pro- Surf, Kiteathelon, Adventure Tourism events etc. In the meantime more than 25 cultural /religious events and arts and entertainment events that has direct impact for tourism development will be conducted by Sri Lanka Tourism .


October, 2014


International


Fed Rate Hike

Federal Open Market Committee (FOMC) judges that there has been considerable improvement in labor market conditions in 2015, and it is reasonably confident that inflation will rise, over the medium term, to its 2 % objective.

Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 0.25 to 0.5 % with effect from 17 December 2015.

The move is likely to cause ripples around the world. It could also mean higher borrowing costs for developing economies, many of which are already seeing slow growth. In Sri Lanka, interest rates are expected to increase in 2016 as global borrowing costs increase, forcing the government to rely more on domestic sources to satisfy its borrowing requirements.


2016’s Global Wealth Forecast: The Economist

Emerging markets have given the global economy most of its muscle since the recession ended in 2009.

But in 2016 rich countries will account for their largest share of global growth this decade.

The BRICs are in a sorry state. Brazil’s government has been both incompetent and corrupt.

Russia’s has been no better, with a dose of military malevolence thrown in. Source: The Economist

Cont..


2016’s Global Wealth Forecast (cont..)

China will perform reasonably well in 2016 if you believe the government’s numbers. By that reckoning, its GDP will rise by around 6.5%. The reality almost certainly will be lower. China is mired in debt and has mismanaged its currency and stockmarkets, sending shocks through the global economy.

India looks perkier: it will grow by more than 7%. But that is worse than its average of 8.5% growth between 2005 and 2010. All said, the BRICs will make up only 16% of worldwide growth in 2016.

The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC

The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose.

< Research & Development Unit >

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Economic Capsule - December 2015

Economy & Finance

Transcript of Economic Capsule - December 2015