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Inflation to remain at single digit levels on continued fiscal consolidation, moderating global prices
Export growth 14% in 2012, imports up 11%
BOP to record moderate surplus
The Central Bank yesterday said the economy was expected to record broad based economic growth of 8.5 to 9 percent next year with positive contributions from all key sectors of the economy. The economy is expected to post an 8.3 percent growth rate this year.
Releasing the report ‘Recent Economic Developments’ before the Budget 2012 was tabled in parliament, the Central Bank said; "The Agriculture sector is expected to enhance its contribution to overall economic growth benefiting from further expansion of the extent of cultivation in the Northern and Eastern provinces, improved productivity and support services provided by the government. The Industry sector would also expand in 2012, particularly with the contribution from the expansion in factory industry output with the expected increase in demand being generated from both domestic and international markets, and the contribution from increased construction activity, food processing, rubber based industries and new industries such as ship and boat building. Meanwhile, the Services sector is projected to expand with positive contributions from all sub-sectors including domestic and foreign trade, tourism, transportation, telecommunications and financial services."
The Central Bank said inflation was expected to hover around the mid-single digit levels in 2012.
"Money supply would be maintained at a level compatible with the expected growth in the nominal GDP in 2012. Increased domestic agricultural production and the expected stabilisation of commodity prices including crude oil prices in the international market are expected to reduce the pressure on domestic prices. The sluggish recovery in many advanced economies with renewed uncertainties, and its impact on global demand is likely to contain increases in commodity prices globally, including the price of petroleum. These together with continued fiscal consolidation and timely monetary policy action to mitigate any demand driven inflationary pressures would ensure achieving a low and stable inflation in 2012," the bank said.
It said the economy would record a moderate Balance of Payments surplus in 2012.
"Both exports and imports in 2012 are expected to grow at a lower rate than in 2011, mainly due to the high base in 2011. Exports are projected to grow at around 14 per cent with higher value addition, diversification of export products and markets, and supported by the gradual recovery of the world economy. Imports are projected to grow at around 10 per cent with continued demand for intermediate and investment goods arising from increased economic activity including in the Northern and Eastern provinces, low tariff rates, improved performance in the tourism sector, and the continuation of major infrastructure projects. Foreign inflows to the services account are expected to improve further in 2012, facilitated by higher earnings from tourism, improved port and airport related activity and information technology services. The current account deficit is projected to be around 3.9 per cent of GDP in 2012, lower than the deficit in 2011. The overall BOP is expected to record a surplus and the gross official reserves would remain high equivalent to around 5 months of imports," the Central Bank said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=39519
Export growth 14% in 2012, imports up 11%
BOP to record moderate surplus
The Central Bank yesterday said the economy was expected to record broad based economic growth of 8.5 to 9 percent next year with positive contributions from all key sectors of the economy. The economy is expected to post an 8.3 percent growth rate this year.
Releasing the report ‘Recent Economic Developments’ before the Budget 2012 was tabled in parliament, the Central Bank said; "The Agriculture sector is expected to enhance its contribution to overall economic growth benefiting from further expansion of the extent of cultivation in the Northern and Eastern provinces, improved productivity and support services provided by the government. The Industry sector would also expand in 2012, particularly with the contribution from the expansion in factory industry output with the expected increase in demand being generated from both domestic and international markets, and the contribution from increased construction activity, food processing, rubber based industries and new industries such as ship and boat building. Meanwhile, the Services sector is projected to expand with positive contributions from all sub-sectors including domestic and foreign trade, tourism, transportation, telecommunications and financial services."
The Central Bank said inflation was expected to hover around the mid-single digit levels in 2012.
"Money supply would be maintained at a level compatible with the expected growth in the nominal GDP in 2012. Increased domestic agricultural production and the expected stabilisation of commodity prices including crude oil prices in the international market are expected to reduce the pressure on domestic prices. The sluggish recovery in many advanced economies with renewed uncertainties, and its impact on global demand is likely to contain increases in commodity prices globally, including the price of petroleum. These together with continued fiscal consolidation and timely monetary policy action to mitigate any demand driven inflationary pressures would ensure achieving a low and stable inflation in 2012," the bank said.
It said the economy would record a moderate Balance of Payments surplus in 2012.
"Both exports and imports in 2012 are expected to grow at a lower rate than in 2011, mainly due to the high base in 2011. Exports are projected to grow at around 14 per cent with higher value addition, diversification of export products and markets, and supported by the gradual recovery of the world economy. Imports are projected to grow at around 10 per cent with continued demand for intermediate and investment goods arising from increased economic activity including in the Northern and Eastern provinces, low tariff rates, improved performance in the tourism sector, and the continuation of major infrastructure projects. Foreign inflows to the services account are expected to improve further in 2012, facilitated by higher earnings from tourism, improved port and airport related activity and information technology services. The current account deficit is projected to be around 3.9 per cent of GDP in 2012, lower than the deficit in 2011. The overall BOP is expected to record a surplus and the gross official reserves would remain high equivalent to around 5 months of imports," the Central Bank said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=39519
