Economic Capsule - December 2015

1. Economic Capsule
December 2015
Research & Development Unit
228th Issue

2. C O N T E N T S
BANKING AND FINANCE 
 CBC Results for the 09 Months Ended 30.09.2015
 Commercial Bank Branches go Green
 Commercial Bank bags Gold for Best Annual Report in Banking Sector
for 12th time
 CBSL Hikes SRR by 150bp
ECONOMY & BUSINESS 
 Sri Lanka Maintains High Rank in Human Development Index
 Economy Grows 4.8 % in 3Q, 2015
 Sri Lanka Signs FDI Deals for Estimated US$ 1.6 bn in 2015
 Sri Lanka Inflation Slows in December
 Megapolis Plan Presented to President
 Sri Lanka Launch Tourism Strategy 2016
INTERNATIONAL NEWS 
 Fed Rate Hike
 2016’s Global Wealth Forecast: The Economist

3. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
Banking & Finance

4. 4< Research & Development Unit >
CBC Results for the 09 Months Ended
30.09.2015
Cont..

5. 5< Research & Development Unit >
CBC Results for the 09 Months Ended
30.09.2015 (cont..)

6. 6< Research & Development Unit >
Commercial Bank Branches go Green
 Commercial Bank is already generating 40kW of solar power for its branches at Balangoda, Borella,
Narahenpita and Maharagama, and will increase this figure to 240kW when the installation of solar
power systems at the Kollupitiya, City Office, Main Street, Gampaha and Nugegoda branches is
complete.
 At least five more branches operating in buildings owned by the Bank are to receive solar power
systems in 2016, under this programme.
 Under the “Green Banking” programme, Commercial Bank has also invested a further Rs 36 mn on
20 more units of a new generation automated cash deposit terminal that completely eliminates the
use of paper.
Commercial Bank’s environment-related initiatives
have made steady progress in 2015 with the
installation of solar power systems at four
branches, the award of tenders for five more
branch conversions, and the acquisition of 20 more
paperless deposit machines.

7. 7< Research & Development Unit >
Commercial Bank bags Gold for Best Annual
Report in Banking Sector for 12th time
 Best Annual Report (banking institutions)
Edmund J. Cooray Memorial Trophy
 Gold award for Management
Commentary
 Silver award for Corporate Governance
Disclosure
 Bronze award for the Best Annual Report
overall across all sectors
 Bronze award for CSR Reporting
Commercial Bank became the most-awarded Bank at the 2015 Annual Report Awards
of the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka)

8. 8< Research & Development Unit >
CBSL Hikes SRR by 150bp
Central Bank increased the Statutory Reserve Ratio (SRR) applicable to
all rupee deposit liabilities of commercial banks by 1.50 percentage
points to 7.50 % to be effective from 16 January 2016.
According to CBSL, If the current excess
liquidity in the domestic money market
continues to remain high for an extended
period, it could lead to an undue expansion
in monetary aggregates, fuelling future
inflation in the economy. In that respect, the
Monetary Board is of the view that it is
appropriate to restrain the build-up of
demand-side pressure on inflation to ensure
continued monetary and price stability.
Source: CBSL

9. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
Economy & Business

10. 10< Research & Development Unit >
Sri Lanka Maintains High Rank in Human
Development Index
 Sri Lanka has maintained its rank in the 'high human
development category' at 73rd place according to
Human Development Report 2015 by the United
Nations Development Program (UNDP).
 According to the Human Development Index (HDI)
monitored annually by the Human Development
Report (HDR), Sri Lanka out of 188 countries has
gradually improved in human development reaching
0.757 in the Human Development Index (HDI) in 2014
from 0.679 in 2000. The world average in 2014 is
0.711 and South Asia averaged at 0.607.
Source: UNDP
Source: UNDP

11. 11< Research & Development Unit >
Economy Grows 4.8 % in 3Q, 2015
 As per the new series, GDP recorded a growth of 4.8% in 3Q,
2015 led by the improvement in agriculture and industry sector
activities.
 Agriculture: Growth in agriculture continued to improve in
2015, partly reflecting output normalization after last year's
drought.
 Industry: Industrial activities improved by 6.2 % in 3Q, 2015
compared to the same period in 2014 supported by the
improvement in the activities of manufacture of wood and
products of wood and manufacture of machinery and
equipment. However, the manufacture of textile and wearing
apparel activities recorded a decline of 2.4% during 3Q, 2015
compared to 3Q, 2014.
 Services: the Service activity, which is the highest
contributor (57.1 %) to the total GDP, recorded a slight
growth of 3.4% in 3Q, 2015 compared to the same period in
2014 led by the improvement in wholesale and retail activities. Source: DCS

12. 12< Research & Development Unit >
Sri Lanka Signs FDI Deals for Estimated
US$ 1.6 bn in 2015
 Sri Lanka's Board of Investment has signed
agreements for foreign direct investments
worth an estimated USD 1.6 bn in 2015, up
slightly from last year, according to the BOI.
 Among the agreements signed by the BOI in
2015 were three agreements with Dialog Axiata,
Dialog Broadband Networks (Pvt) Ltd and Dialog
Television (Pvt) Ltd for a total investment of
USD 175 mn.
 Another significant agreement signed by the
BOI in 2015 was with Senok Automobile (Pvt)
Ltd. to assemble Volkswagen automobiles in Sri
Lanka, worth USD 26.5 mn.

13. 13< Research & Development Unit >
Sri Lanka’s Inflation Slows in December
 Sri Lanka's year on year inflation
slowed to 2.8 % in December
2015, down from 3.1 % in
November.
 Prices rose 0.5 % during the
month with the Colombo
Consumer Price Index rising to
185.2 from 184.7 points.
 Food price inflation slowed to
0.8 % during the month from
3.0 % in November.
Source: DCS

14. 14< Research & Development Unit >
Megapolis Plan Presented to President
 Sri Lanka’s President Maithripala Sirisena was
presented with the new government’s Megapolis
Plan formulated to develop the island’s Western
Province.
 According to Minister of Megapolis and Western
Development, Sri Lanka will be able to get about
USD 30 bn worth investments within next 10
years through this project.
 The implementation of the development plan is to be carried out under three phases and will
be completed by 2030.
 The Megapolis Development Plan has identified issues that should be given priority in the town
development – this includes traffic congestion, garbage disposal and housing facilities for slum
dwellers as well as drinking water and sanitary facilities.

15. 15< Research & Development Unit >
Sri Lanka Launches Tourism Strategy 2016
At this backdrop, the tourism promotional plan of year 2016 is formulated based on five key
strategic objectives
 Attracting a target number of 2.2 mn visitors
 with 26% annual growth,
 Increasing average daily expenditure of a tourist up to US$ 200,
 Increasing average stay and
 Contributing to generate a total tourism revenue up to US$ 2.75 bn
 Sri Lanka Tourism has formulated a broad Strategic Marketing Plan for
year 2016, with the participation of private and public sector
stakeholders addressing long standing needs of the industry and the
future expectations of the country as a tourism destination.
 During year 2015 up to November , Sri Lanka Tourism recorded 18.1%
growth on arrivals with 1.5 mn arrivals. The total tourism revenue
generated was US$ 2.2 bn.
Cont..

16. 16< Research & Development Unit >
Sri Lanka Launches Tourism Strategy 2016 (cont..)
 Uplifting Sri Lanka’s brand value up to US$ 80 mn through tactical marketing campaigns
focusing on main product offerings of the county will serve as the overall goal of the
promotional strategy devised for 2016.
 Positioning Sri Lanka as a venue for international and domestic events will be a key component
of the 2016 marketing strategy.
 Sri Lanka Tourism hope to stage internationally acclaimed tourism related events in Sri Lanka
during next year such as Arugam Bay Pro- Surf, Kiteathelon, Adventure Tourism events etc. In
the meantime more than 25 cultural /religious events and arts and entertainment events that
has direct impact for tourism development will be conducted by Sri Lanka Tourism .

17. Condominium Industry
in Sri Lanka
October, 2014
Research & Development Unit
International

18. 18< Research & Development Unit >
Fed Rate Hike
 Federal Open Market Committee (FOMC) judges that there has
been considerable improvement in labor market conditions in
2015, and it is reasonably confident that inflation will rise, over
the medium term, to its 2 % objective.
 Given the economic outlook, and recognizing the time it takes
for policy actions to affect future economic outcomes, the
Committee decided to raise the target range for the federal
funds rate to 0.25 to 0.5 % with effect from 17 December 2015.
The move is likely to cause ripples around the world. It could
also mean higher borrowing costs for developing
economies, many of which are already seeing slow growth.
In Sri Lanka, interest rates are expected to increase in 2016
as global borrowing costs increase, forcing the government
to rely more on domestic sources to satisfy its borrowing
requirements.

19. 19< Research & Development Unit >
2016’s Global Wealth Forecast: The Economist
 Emerging markets have given
the global economy most of
its muscle since the recession
ended in 2009.
 But in 2016 rich countries will
account for their largest share
of global growth this decade.
 The BRICs are in a sorry
state. Brazil’s government has
been both incompetent and
corrupt.
 Russia’s has been no better,
with a dose of military
malevolence thrown in.
Source: The Economist
Cont..

20. 20< Research & Development Unit >
2016’s Global Wealth Forecast (cont..)
 China will perform reasonably well in 2016 if you believe the government’s
numbers. By that reckoning, its GDP will rise by around 6.5%. The reality almost
certainly will be lower. China is mired in debt and has mismanaged its currency
and stockmarkets, sending shocks through the global economy.
 India looks perkier: it will grow by more than 7%. But that is worse than its
average of 8.5% growth between 2005 and 2010. All said, the BRICs will make
up only 16% of worldwide growth in 2016.

21. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial
Bank of Ceylon PLC
The information contained in this presentation has been drawn from sources that we believe to be
reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the
information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be
held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in
consequence of using such information for whatever purpose.
< Research & Development Unit >