Macroeconomic Forecast Sri Lanka

For the second consecutive month, export growth witnessed an increase from the -4.9% y-o-y low in October 2011, coming in at 24.3% in December, according to the Central Bank of Sri Lanka's latest data. Monthly earnings ticked up to US$905.5mn (from US$879.3mn in the previous month), hitting a four-month high. Looking ahead, despite the recent recovery, we expect export growth to slow in 2012 to 9.0% (from 26.0% last year), as demand from the European Union (the island nation's largest export market) is expected to be much weaker. Barring the uninspiring 50.4 in January, the EC Composite PMI has been in contraction since September 2011.

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