 Economic forecast 1999. |
According to the latest official statistics, the economy is expected to grow at 5.4% this year. At the MCB, however, we expect the growth rate to be slightly higher
on account of better than assumed growth rates in the EPZ sector and tourism, and probably
in the sugar and construction sectors. Our most likely growth scenario has consequently
been upgraded to5.7%, which lies within the target set out in the New
Economic Agenda. Growth is expected to be sustained next financial year and possibly
quickening to around6.0% next calendar year depending on the implementation
schedule of the forthcoming energy and infrastructural projects.
| At sectorial level, the following official forecasts, as at the last budget, are
expected for 1999:
Sugar +3.4% (production of 640,000 tonnes)
EPZ +6.0% (exports of Rs 45 billion)
Domestic oriented Industry +5.6%
Construction +3.0%
Tourism +8.2% (arrivals estimated at 580,000)
Banking +8.0%
Non-Banking financial services +7.4%
However, our growth forecast is based on an expansion of the EPZ sector of 7.0% based
on export earnings of Rs 26 billion and a real growth rate of over 10% in the tourism
sector. If favourable weather conditions were to persist, the sugar output could well
exceed the 640,000 tonnes target which will make for the highest output level since 1992.
Aggregate consumption expenditure as a percentage of GDP is expected to remain stable
at 75.8% this calendar year. Consequently, the Gross Domestic Savings rate will remain at
24.2% of GDP. On the other hand, the investment level, as measured by the ratio of GDFCF
to GDP, will decrease substantially to 22.6% as compared to 27.0% achieved last year.
However, the real growth rate of GDFCF, excluding aircraft and marine vessel, is expected
to be of the order of 3.7%. |
