Macroeconomic Forecast Sri Lanka

BMI View: Despite the economy's resilience in 2007, we envisage a deceleration of real GDP growth to 6.0% in 2008, because of the civil war, high inflation, and the slowdown in the US and Eurozone - Sri Lanka's biggest export destinations. The inflation outlook is particularly worrisome, with the new CCPI (N) index rising by 28.2% y-o-y in June. We have raised our 2008 CPI forecast to 22.0% from 18.0 % and envisage inflation remaining in double-digits until at least the end of 2010.

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