Sri Lanka’s net foreign inflows rose to Rs. 2.4 billion in July, compared to Rs. 619 million in June, according to CT Smith Stockbrokers’ Sri Lanka Monthly report for July 2012. Further, the report attributed this foreign inflow increase mainly to the Juy 31, 2012, acquisition of a 42 per cent stake of local retail chain ODEL by Singapore’s Parkson Retail Asia at a cost of Rs. 1.4 billion.
At the same time, this increase also fed into a total cumulative rise in foreign inflows, from August 2011 to July 2012, of Rs. 25.6 billion compared to Rs.-8.2 billion during the same period to end-July 2011, with the highest foreign inflow of Rs. 17.9 billion recorded during the month of March 2012.
Additionally, according to the report, higher foreign inflows for the five months to end-May 2012 also benefitted from gross worker remittances growing by 18 per cent year-on-year (YoY) to US$ 2.4 billion, with US$ 507 million in gross worker remittances received in May 2012 alone. CT Smith also reaffirmed its previous forecast of gross worker remittances being US$ 5.7 billion as at end-2012, up 11 per cent YoY. The report also indicated that another reason for higher foreign inflows was earnings from tourism, which increased to US$ 397 million between January 2012 and May 2012, while government inflows also rose to US$ 1.7 billion. It was also noted, foreign direct investments during the period, January 2012 to May 2012, amounted to US$ 437 million.
On the other hand, a reduction in exports from local industries meant that only the construction sector was able to positively impact higher foreign inflows. Elaborating, the report stated: “The agriculture sector [12.7% of 1Q2012 real GDP] rose 11.5% in 1Q2012 attributable to the low base effect. Meanwhile, the industry sector [30.0% of 1Q2012 real GDP] also recorded a strong growth of 10.3% in 1Q2012 [vs.11.1% in 1Q2011], led by a 17.5% growth in the construction sector. However, the services sector [57.3% of 1Q2012 real GDP] growth slowed to 5.3% in 1Q2012 [vs. 9.5% in 1Q2011], largely due to the reduction in export trade during the quarter”.
Continuing, the report also stated: “Construction sector (7.7% of GDP) grew 17.5% YoY (vs. 14.3% in 1Q2011); the highest ever recorded quarterly growth since 2002, led by the construction of large scale projects such as hotels, apartment complexes and road constructions. Furthermore, disbursement of loans for the sector increased 21% YoY. Meanwhile, cement production rose 68% YoY to 1.8 million metric tonnes in 1Q2012″. (JH)