Sri Lanka

Category: Education

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economy analysis of srilanka


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Outline Introduction Geography Climate Snapshot of the economy Major Sectors in Sri Lankan Economy Global Economic Relations Bilateral Economic Relations Between India and Sri Lanka Opportunities in Sri Lanka Challenges and Risks Associated With Investments in Sri Lanka Conclusion


Introduction Sri Lanka is a lower-middle income developing nation with a gross domestic product of about $50 billion (official exchange rate). This translates into a per capita income of $5,100 (purchasing power parity). Sri Lanka's 91% literacy rate in local languages and life expectancy of 75 years rank well above those of India, Bangladesh, and Pakistan. English language ability is relatively high, but has declined significantly since the 1970s


Geography The island of Sri Lanka lies atop the Indian Tectonic Plate, a minor plate within the Indo-Australian Plate. It is positioned in the Indian Ocean, to the southwest of the Bay of Bengal, between latitudes 5 ° and 10°N, and longitudes 79° and 82°E. Sri Lanka is separated from the Indian subcontinent by the Gulf of Mannar and the Palk Strait. The island consists mostly of flat-to-rolling coastal plains, with mountains rising only in the south-central part. Amongst these is the highest point Pidurutalagala , reaching 2,524 meters (8,281 ft) above sea level.


Climate The climate of Sri Lanka can be described as tropical and warm. Its position endows the country with a warm climate moderated by ocean winds and considerable moisture. The mean temperature ranges from about 17 °C (62.6 °F) in the central highlands, where frost may occur for several days in the winter, to a maximum of approximately 33 °C (91.4 °F) in other low-altitude areas. The average yearly temperature ranges from 28 °C (82.4 °F) to nearly 31 °C (87.8 °F). Day and night temperatures may vary by 14 °C (25.2 °F) to 18 °C (32.4 °F ). Rainfall pattern of the country is influenced by Monsoon winds from the Indian Ocean and Bay of Bengal.

The Economy:

The Economy With an economy worth $56 billion (2011 IMF estimate) ($140 billion PPP estimate), and a per capita GDP of about $7000 (PPP), Sri Lanka has mostly had strong growth rates in recent years. In GDP per capita terms, it is ahead of other countries in the South Asian region. Currency-Sri Lankan rupee Population- 20.2 million GDP(PPP): $56billion/ $140 billion PPP GDP growth: 8.2% (2010)/9.5%(2011 est.) GDP per capita: $5,300(2011 est.)/ $7000 USD PPP GDP by sector: Agriculture- 12.8% Industry- 29.2% Services: 58% Population BPL: 7.6%

The Economy:

Labour : 8.1 million note: excludes northern and eastern provinces Labour Force by occupation: Agriculture 32.7%, Industry-26.3%,Services- 41% Unemployment- 3.4% Main Industry Processing of rubber Tea Coconuts Tobacco & other agricultural commodities Telecommunications Insurance Banking Tourism Textiles The Economy

The Economy:

Cement Petroleum Refining Information technology Services Construction Exports- $7billion Imports- $9.6billion Main import partners – India(18.9%), China(12.4%), Iran(7.7%), Singapore(7.5%), South Korea (4.8%) Foreign Reserve: $ 7.2 billion Inflation: 3.4% The Economy

Major Sectors:

Major Sectors Agriculture Cash Crop Tea Rubber Coconut Food Crop Rice


. Services Tourism Banking Finance Retail Trade Manufacturing Textile Ceramics Cement Fertilizers Major Sectors

Sri Lanka’s Exports:

Sri Lanka’s Exports Sri Lanka’s exports were estimated to be $8.3 billion for year 2010. The major export commodities of Sri Lanka are Textiles and apparel. Tea and spices. Diamonds, Emeralds, Rubies. Coconut products. Rubber manufactures. Fish.

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Exports to the United States, Sri Lanka's most important single-country market, were estimated to be around $1.77 billion for 2010, or 21% of total exports. Sri Lanka must diversify its exports beyond garments and tea. The information technology (IT) and business process outsourcing (BPO) sector is small but growing.

Sri Lanka’s Imports :

Sri Lanka’s Imports Sri Lanka’s imports were estimated to be $13.5 billion for year 2010. The major import commodities are Textile fabrics Mineral products Petroleum Foodstuffs Machinery and transportation equipment

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India is Sri Lanka's largest source of imports, accounting for over 20% of imports. The following graph depicts the share of various import partners of Sri Lanka:


Sri Lanka had applied for credit ratings from international agencies in its efforts to apply for loans from international markets in 2005. Standard and Poor's has rated Sri Lanka a "B+" speculative rating, four grades below investment grade. Fitch has rated Sri Lanka with "BB-" which is three grades below investment grade. Sri Lanka in mid-2007 sought to borrow $500 million from international markets to shore up the deteriorating exchange rate and reduce pressure on repayment of the domestic debt market. Credit Rating and Commercial Borrowings

Foreign Trade And FTA:

Foreign Trade And FTA India's first bilateral Free Trade Agreement was with Sri Lanka India is 3rd largest export destination for Sri Lanka India is the largest source of imports for Sri Lanka

Foreign Direct Investment:

Foreign Direct Investment S ri-Lanka has become one of the most attractive destination for Indian FDI. Half of india's FDI in SAARC region is located in Sri-Lanka. India is in one of top 5 countries investing in Sri-Lanka.


Tourism India is Sri Lanka's top source of market for tourism. Sri Lanka is 5th largest source of tourist market for India.

Growth with Bilateral Relations:

Growth with Bilateral Relations Sri-Lanka is buying low cost inputs from India to make there higher value added exports more competitive . Imports from India are replacing Sri-Lanka's higher cost imports from other countries . Other services also like health and education . Overall,the trade is beneficial for Sri-Lanka even with growing deficit.

Opportunities in Sri Lanka:

Opportunities in Sri Lanka Infrastructure development Telecom and data communication services Power sector Housing and property development Public transport and environment Foreign ownership up to 100% allowed Electronics Educated workforce and R&D facilities

Opportunities in Sri Lanka:

Opportunities in Sri Lanka Light engineering Low manufacturing cost Opportunities in the manufacture of various machinery Textiles, garments and fashion accessories Very large installed capacity, a high level of technical and managerial skill and sophisticated marketing know-how Manufacture of high quality fabric to meet the needs of the expanding garment export industry

Opportunities in Sri Lanka:

Opportunities in Sri Lanka Computer software Investors can take advantage of increased sophistication and knowledge to set up offshore software development units Rubber Manufacture of tyres , tubes and automotive rubber products Agriculture Export-oriented investments in areas such as foliage, cut flowers and exotic fruits and vegetables

Opportunities in Sri Lanka:

Opportunities in Sri Lanka Mining and processing Gems and Jewellery Tourism, recreation and leisure projects Services

Challenges and Risks:

Challenges and Risks Bureaucratic bottlenecks increase the cost of business in Sri Lanka Import bans and restrictions Import fees &licensing Export subsidy Weak enforcement of intellectual property rights

Challenges and Risks:

Trade Gap Low export base Political Stability Human Capital Challenges and Risks

Challenges and Risks:

Sri Lanka allows 100% foreign ownership in some sectors of the economy but imposes limits to others Inadequate infrastructure & Cumbersome bureaucracy are other impudent to investment Banking dominates the financial sector, but high credit cost discourage business activity Challenges and Risks

Conclusion – The Way Ahead:

Conclusion – The Way Ahead Developing Human Capital Developing Technology Encouraging R&D Developing Infrastructure

Thank You:

Thank You

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