Presenting updates for April 2023 in the Banking & Finance, Business, Development and Global Economic sectors.

Download Economic Capsule April 2023

BANKING & FINANCE

ComBank launches LankaPaycards in Sri Lanka

Sri Lanka’s payment cards domain took a giant leap when the Commercial Bank of Ceylon in collaboration with LankaPay launched a national credit and debit card with international acceptance.

This is the first launch of LankaPay Credit Cards in Sri Lanka and the first time five variants of LankaPaycards -three credit cards and two debit cards were launched by a Sri Lankan Bank.

LankaPayCard is an internationally accepted card, which is cost-effective and equipped with the latest technology and highest security features. All domestic transactions via LankaPaycards are routed locally and when the cards are used overseas the transactions are routed via the JCB International network. This initiative will ensure that no foreign exchange outflow takes place for any local card transaction, which could potentially save the country a considerable amount of foreign exchange.

ComBank crowned ‘People’s Private Bank of the Year’ at SLIM Kantar People’s Awards

By popular vote, the Commercial Bank of Ceylon has been crowned the ‘People’s Private Bank of the Year’ at the SLIM Kantar People’s Awards 2023, positioning it as the Bank that is closest to the hearts of the Sri Lankan people.

The Bank was conferred this noteworthy accolade following the results  of a survey to determine consumer preferences across multiple sectors.

ECONOMY, BUSINESS & DEVELOPMENT NEWS

Sri Lanka –Unemployment 2022

Sri Lanka ended 2022 with an official unemployment rate of 4.8%, a figure which masked much of the anomalies in the country’s labour market, as many people either migrated or gave up looking for work when the economy fell into its worst slump in the country’s post-independent history.

Unemployment rates and it’s 95% confidence intervals, 2019Q4 -2022Q4

Purchasing Manager’s Index –March 2023

Manufacturing PMI turned positive in March 2023, after nine consecutive survey rounds, recording an index value of 51.4

This month-on-month expansion was driven by the increase in New Orders and Production sub-indices mainly due to the seasonal demand. However, Employment, Stock of Purchases and Suppliers' Delivery Time sub-indices remained below the neutral threshold.

Services sector PMI returned to the growth territory, recording an index value of 55.1 in March 2023 indicating an expansion across the services sector. This was driven by the increases observed in New Businesses, Business Activities, and Expectations for Activity

The Index PMI is calculated as a ‘Diffusion Index’, where it takes values between 0 and 100

PMI=50 -sector remained neutral on month-on-month basis; 

PMI more than 50 -sector is generally expanding on month-on-month basis 

PMI less than 50 -sector is generally declining on month-on-month basis

Forbes lists Sri Lanka as one of 23 best places to visit in 2023

US-based international travel influencer Juliana Broste, an award-winning travel filmmaker and host, showcasing adventures and fun things to do around the world, recommended Sri Lanka to be listed as one of the best places to visit in 2023 and as a result of her continuous effort, Sri Lanka has been listed on the Forbes list as one of the 23 best places to visit in 2023.

This was a result of her visit to Sri Lanka in 2022, under the Visiting Blogger Programmeof SLTPB 2022 (Sri Lanka Tourism Promotion Bureau). Juliana, who explored the destination on a photo tour, says that even with inflation, visitors will find Sri Lanka a spectacular, affordable destination worth the long haul.

Source: https://www.forbes.com/sites/laurabegleybloom/2023/03/30/the-23-best-places-to-travel-in-2023-chosen-by-the-experts/?sh=4071638776da

Asiri Group plans USD 100mn hospital in Port City Colombo

One of Sri Lanka’s largest private sector healthcare providers, Asiri Hospital Holdings PLC, a unit of SoftlogicGroup, in a landmark announcement disclosed its plans to set up a state-of-the-art hospital within China-backed Port City Colombo (PCC).

Asiri Port City Hospital (Pvt.) Ltd, a fully-owned subsidiary of Asiri Hospital Holdings PLC, has entered into an agreement with the Colombo Port City Economic Commission to lease government-owned land in PCC for a period of 99 years.

A media statement from SoftlogicGroup said a lease agreement was entered into for a hospital with “500 plus bed capacity, with an estimated investment of USD 100 million” within PCC, in line with the master plan of the Colombo Port City Economic Commission.

The proposed hospital is intended to deliver innovative and state-of-the-art healthcare solutions and unique patient care services in promoting health through integrated clinical practice, education and research.

It will also engage local and international medical experts and specialists who will be supported by internationally trained and experienced nursing and medical care staff.

This new venture by Asiri Hospitals of SoftlogicGroup in Sri Lanka is a significant milestone in the country’s journey towards developing and attracting medical tourism.

ADB urges government to revisit proposal to set up credit guarantee institution for SMEs

Asian Development Bank (ADB) urged the government to revisit the policy decision taken in 2016 to setup a small and medium-sized enterprises (SMEs) credit guarantee institution in order to enable access to credit for the country’s credit-constrained SMEs.

“Establishing a credit guarantee institution for small and medium-sized enterprises would encourage entrepreneurs and private sector participation,” ADB stated in its Asian Development Outlook (ADO) report released.

Responding to a request by the government in 2016, ADB initiated a capacity development technical assistance (TA) committee and proposed a project to assist the move to setup a SME credit guarantee institution, a new non-bank financial institution that would support SMEs to access commercial loans, with a USD 50mn loan. However, the project to-date remains in proposed status.

Full report: https://www.adb.org/sites/default/files/publication/863591/asian-development-outlook-april-2023.pdf

NEWS SNIPPETS

Sri Lanka to further relax import controls

State Minister of Finance said that measures would be taken to further relax import restrictions on many other goods in the future.The minister said that it would also be a step towards achieving the revenue target of Sri Lanka Customs.

Tourist Arrivals

Tourist arrivals for the first 16 days of April topped 56,000, bringing the total number of international visitors entering the country for the year-to-date to 392,081.

Provisional data released by the Sri Lanka Tourism Development Authority (SLTDA) showed that for the April 1 to 16 period, the island nation welcomed 56,402 visitors.

Paris Club says aims to start Sri Lanka debt negotiations

The Paris Club of creditor governments aims to start negotiations to restructure Sri Lanka’s debt, the group said after a creditor committee was set up during the third week of April 2023.

The Paris Club said the Japanese and Indian finance ministers along with its president and representatives of Sri Lanka set up a creditor committee on 14thApril, 2023 on the sidelines of the spring meetings of the International Monetary Fund and World Bank in Washington.

GLOBAL UPDATE

“It’s the U.S., not Europe’s banking system that’s a concern” - top EU economists say

Europe learned its lessons after the 2008/09 financial crisis and is now in a strong position to weather further stress in its banking system, several EU economists and policymakers say.

The collapse of U.S.-based Silicon Valley Bank and of several other regional lenders in early March prompted fears of contagion, furthered by the emergency rescue of Credit Suisse by Swiss rival UBS.

Policymakers of both US and the EU took decisive action and pledged further support if needed. Markets have staged something of a recovery.

“U.S-China tensions could cost the world about 2% of its output “-IMF

The International Monetary Fund said that global tensions could disrupt overseas investment and eventually lead to a long-term loss of 2% of the world’s gross domestic product.

Companies and policymakers across the globe are exploring ways to make their supply chains more resilient by “moving production home or to trusted countries,” the IMF warned in a report, adding that this will lead to fragmenting foreign direct investment.

The IMF pointed to recent bills adopted against the backdrop of rising tensions between the U.S. and China, such as Washington’s Chips and Science Act.

Japan recently imposed its own restrictions on 23 types of semiconductor manufacturing equipment, joining U.S. efforts to curb China’s ability to make advanced chips.

BRICS countries to introduce a new currency?

Brazil’s president called on *BRICS nations to come up with an alternative to replace the dollar in foreign trade.His remarks were made on Apr 12, 2023 during a visit to the Shanghai-based New Development Bank, an institution created by BRICS countries.

Beijing has ramped up efforts to boost the use of its own currency in foreign trade. Last month, Brazil and China took steps to make it easier to settle their foreign trade operations in yuan or reais, with the stated goal of reducing costs by eliminating a third currency from the transactions.

South African Foreign Minister has said some countries have inquired on possibilities of obtaining the BRICS membership.In early March 2023,she told that she had inquiries from countries such as Saudi Arabia,United Arab Emirates, Egypt,Algeria, andArgentina, as well as Mexico andNigeria. Source: DW, Bloomberg

China economy rebounds after pandemic measures lifted

China's economy grew faster than expected in the first three months of the year, as the country emerged from its tough COVID restrictions.

Compared to the same period last year, gross domestic product (GDP) grew by 4.5%, official figures show.

The key measure of economic activity was driven up by a boost in household spending and rising factory activity.

Retail sales, the main indicator of household consumption, jumped by 10.6%, compared to a year earlier. At the same time, output from the country's factories rose by 3.9%.

Meanwhile, there was also evidence of a strong rebound for the country's airline industry. China Civil Aviation Administration data showed that more than 45 million air passenger trips were taken last month, an almost threefold increase on the same time last year.

NEWS SNIPPETS

US inflation

America’s annual inflation rate fell to 5% in March 2023 the lowest it has been since May 2021. But the core inflation rate, which strips out volatile food and energy prices, rose to 5.6%. On a month-by-month basis the price of natural gas for consumers fell again, by 7.1%. Petrol dropped by over 4%.

More Fed rate hikes

Even with turmoil in the banking industry and uncertainty ahead, the Federal Reserve likely will approve a quarter-percentage-point interest rate increase during the last week of April 2023, according to many Wall Street experts.

China

China recorded a surprising surge in export growth for March, 2023 reversing five months of declines. Exports were up by 15%,year on year, mostly in electric cars, lithium and solar panels.

China’s property industry rebounded for the first time in more than a year, while the government said it will take more measures to boost consumption, adding to optimism about the economy’s outlook. The real estate sector grew 1.3% in January-March, 2023 from a year earlier, according to National Bureau of Statistics data released on 19th April, 2023.

Zambia - Debt restructuring latest 

Zambia’s official creditors, co-led by China, made progress towards a long-awaited debt-restructuring deal on 18thApril, 2023 and will meet again next month.

Monthly global commodity price movements -2022 to 2023 March

Emerging from the economic crisis

• There should be no room for complacency.

• Implementation and follow through of economic reforms would be key.

Download Economic Capsule April 2023