By Peter
Kohli
The Sri
Lankan economy grew by 6.4 % in the first quarter of 2015, equaling that of the
previous quarter. Manufacturing was up 6.5%, the service sector was up 7.5%,
while agriculture barely registered any growth.
But the
overall numbers should be good news for investors despite growing concern about
possible political instability. Ever since the presidential election last
January when Maithripala Sirisena won the election, thereby ousting long-time
president Mahinda Rajapaksa, Sirisena has not enjoyed a majority government in
parliament and is therefore unable to pass any reform legislation.
In fact,
Prime Minister Ranil Wickremesinghe faces a no confidence vote in the next few
days which, if successful, would mean immediate elections. This uncertainty has
taken a toll on the markets, and the benchmark index Sri Lanka Colombo Stock
Exchange All Share Index CSEALL is down nearly 3.5% YTD.
In a recent
interview with CNBC, Sri Lankan Finance Minister Ravi Karunanayake, when asked
whether the no confidence vote was an indication that the population was tired
of the stagnant economy said, “Considering the fact that the economy we
inherited is public debt driven, corrupted and without a focus, it is the
incumbent president and the prime minister who have given Sri Lanka a new lease
of life."
The
consensus of opinion is that the former president, bitter over his defeat, is
behind this no confidence vote. The current government is pro-West and I hope
survives the vote. (www.nasdaq.com)
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