Sri Lanka: Your Cup of Tea

Searching for that extra spark in your trading ideas that will give you a change? Sometimes, you need to look under the rock to find what you need. Look beyond China these days and start extending your horizons. It’s Sri Lanka that is the next on the list for investors. The darling of Southeast Asia, the gem of the Indian Ocean is the one of the few that didn’t get dragged down by the downturn in the markets. Its start to the year was and still is a cause for celebration.

When the Federal Reserve hinted at tapering back last year in 2013, the world rushed back to the States with their dollars, fleeing the other markets around the world. But, Sri Lanka never suffered from that outflow of capital from its economy. The economy seems as if it will be able to get over Quantitative Easing being removed when (or if) it actually happens.

• In fact, last year it saw an inflow (net) of capital to the value of nearly 23 billion Sri Lankan rupees. That’s roughly $175 million.
• The 2012 in flow was double that almost at 40 billion Sri Lankan rupees.
• The main exchange of Sri Lanka, the Colombo Stock Exchange (CSE), was the highest performing index in the world; in the aftermath of the Sri Lankan Civil War it actually rapidly increased, by a staggering 125.2% in2009.
• It is set to increase by at least 15% this year.
• The economy saw its Gross Domestic Product increase by 6.4% in 2012.
• That went up to 7.2% in 2013.
• The forecast so far this year is even higher at 7.8%.
• It is forecast to average out at 8.3% over the next three-year period.

It’s thanks to the end of the civil war in the country that the economy has been able to take off. Infrastructure has been developed and the country has turned itself into a major maritime and aviation hub in the region today. They are also concentrating on research and energy. The Governor of the Central Bank of Sri Lanka Ajit Nivard Cabraal also lowered the interest rates in the country at the start of the year, while the rest of the region is increasing theirs.

The Sri Lankan economy has a value of $59 billion today. But consumer spending is not quite good enough still today despite the economic gains being made by the country. But, that means that the country has good potential. Consumer sentiment will increase in the coming years undoubtedly as Sri Lanka attracts greater foreign investment. Foreign direct investment will bring the sluggish consumers out.

Rebounding economic growth and economic opportunities that have been rushed in after the end of the civil war in May 2009 mean that Sri Lanka is finally coming to grips with its economy. The strong prospects for economic growth will undoubtedly mean that Sri Lanka is the place to invest in and it may just be your cup of tea. But, think again if you believe that the tea industry is the only place to invest in there!

Originally posted: Sri Lanka: Your Cup of Tea

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