ECONOMYNEXT – Sri Lanka’s manufacturing continued to expand in January 2024 with a pick-up in apparels while services also moved forward despite concerns over a hike in value added tax, according to a Purchasing Managers’ Index compiled by the central bank.
The PMI for Manufacturing was above 50 at 55.6 in January 2024, up from 52.7 in December.
“The expansion in New Orders and Production was largely driven by the manufacture of textiles & apparel sector,” the statement said.
“However, New Orders and Production in the manufacture of food & beverages sector decreased on a month-on-month basis due to the decline in demand with the end of December festival season.
“Meanwhile, Employment and Stock of Purchases expanded during the month in line with the New Orders and Production.”
Delivery times had lengthened with the disruption in shipping through the Red Sea.
“Expectations for the manufacturing activities for the next three months remain positive, mainly due to the improved macroeconomic environment,” the central bank said.
The central bank has provided monetary stability to the country since around September 2022 and also allowed the exchange rate to appreciate from 360 to 313 levels to the US dollar amid deflationary policy and interest rates are also falling.
Since gaining self-determination from the British, Sri Lanka legislatively broke an East Asia style currency board and inflationist have busted to rupee from 4.76 to the US dollar along with most South Asian nations except the Maldives, denying monetary stability, triggering exchange controls, trade controls, outmigration and social unrest.
Sri Lanka Purchasing Managers’ Index for Services was measured at 60.1, also above 50.
“The continued expansion in Business Activities was driven by the significant improvements observed in other personal service activities, and accommodation, food and beverage sub-sectors amid tourist arrivals surpassing 200,000 for the second consecutive month,” the central bank said.
“Meanwhile, financial services also improved further in line with the reductions in market interest rates.”