"Sri Lanka currently boasts South Asia's highest GDP growth, conducive fiscal and monetary policy, and favorable socio-economic conditions; Sri Lanka expects an average GDP growth of 8% per annum over the next three years"
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Sri Lanka aims to be the ‘Miracle of Asia’. The country is poised to pull-off one of the biggest economic comebacks in recent times and as an emerging economy has shown considerable expansion since the end of the war in 2009.
Economy on the rise
Sri Lanka is ranked as the most liberalized economy in South Asia and Sri Lanka's medium-term GDP growth forecasts rank it as South Asia's fastest-growing economy. Over the next 3 years, Sri Lanka's GDP is expected to grow to 8% per annum from the present level of 7.5%. Inflation is expected to stay in single digits and per capita income is expected to reach USD 4,000 by 2016E.
Supportive government policies
Sri Lanka hopes to create an attractive and rewarding investment destination by capitalising on its comprehensive fiscal and monetary policies along with mega infrastructure investments such as the construction of South Asia's tallest multifunctional tower - Lotus Tower due to be completed in 2015; and the development of new airports, ports and expressways.
Tourism is the main focus in the growth story and the Government hopes to promote Sri Lanka as a leading tourism and transhipment hub in the near future.
Foreign investments
Foreign Investment in the country is also growing with net positive flow of foreign investments of LKR 39Bn (USD 335.1Mn) in 2012. The Government of Sri Lanka has adopted a flexible exchange rate policy in the past few years, in response to a high import bill. In 2013 the rupee stabilized at LKR131/USD, with an overall rupee depreciation of 2.5% against the USD caused by corrective measures taken by the Government to curb the trade deficit.
Total foreign ownership is welcome in almost all areas of the economy, with only a few areas limited or restricted to foreigners.
The country is in search of foreign direct investments to expand the national economy rapidly.
Capital market on a growth trajectory
The Sri Lankan capital market is on a growth trajectory with improved market sentiments and the easing of market liquidity. In the past few years the market has grown rapidly, as evidenced by the ASPI, which outperformed global and developed market indices between 2009 and 2014.
Along with the Securities and Exchange Commission (SEC), the Colombo Stock Exchange (CSE) is currently making progress in increasing the free float and depth of the market.
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