Finally, Spain has sounded the horn! About time if you ask
me. With the escalating pressures on its economy, it is interesting to know
that it took the nation such a long time to seek the aid that they now seek.
And trust me, things are not going to look “peachy” just yet.
I do not want to be the bringer of bad news (as I have been
perceived by quite a few since my article on the impending doomsday), but NASA just sent out
an alert that we might actually be facing a global catastrophe on the 21st
of Dec 2012 and governments have been urged to take needed precautions. With
the increased frequency of solar storms and its dangerous magnitudes, there are
going to be interesting “global climate related” events that are bound to take
place. Well, if it ends, it ends… But, let’s make money until then shall we?
As most of you already know, I have been introducing many
different kinds of investment mechanisms and portfolios since 2010. Starting
off with just mutual funds, the search for more investment avenues continued
and brought forth new and unique investments like gold, silver bars &
coins, land, local and foreign property market investments and the occasional
fixed deposits. And now, I’m glad to say that I have been granted the license
from the Colombo Stock Exchange in Sri Lanka and am able to trade for the
National Development Bank of Sri Lanka in Malaysia! This means, I can now offer
opportunities for individuals from Malaysia to partake in the growth of the Sri
Lankan capital market, financial sector and the various other industries. This
would also include fixed deposits, IPOs (of which I get first dips to!), stock
market and mutual funds.
I know that quite a number of the readers would be saying
(in a relatively calm fashion) the following with due concern:
“SRI LANKA?! IS HE NUTS?! WHY ON EARTH SRI LANKA?! ISN’T
THAT A WAR PRONE ZONE?!”
Well, for those who have been
following my articles for the past year and a half would know by now that I
have the habit of backing my statements with a fair amount of research. And
what research has shown is that with an expected GDP growth rate of over 7% in 2012 in comparison to a
rate of over 8% in 2010 and 2011, the macroeconomic environment in Sri Lanka looks
encouraging.
Construction sector development, healthy growth levels in
both agriculture and tourism industries are expected to maintain credit growth
in the banking industry. However the recent measures introduced by the Central
Bank to avoid the economy from overheating would bring down the credit growth
to around 20% in 2012 compared to over 30% in 2011.
To understand the
growth of the Sri Lankan economy with respect to other countries, I have
created a table to compare the real GDP growth of Sri Lanka with that of some
others. For those who are wondering, the Real GDP (Gross Domestic Product) is the GDP minus Inflation. To put it into
perspective, if a country had recorded a GDP growth of 5% and an inflation of
6%, this would mean that the Real GDP grew by
-1%.
·
GDP
– Inflation = Real GDP
·
5% -
6% = -1%
Real GDP Growth Table
|
COUNTRY
|
YEARS
(Real GDP Growth Rate %)
|
|||||||||||
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
|
|
SRI
LANKA
|
3.7
|
5.6
|
-1
|
3.2
|
5.5
|
5.2
|
6
|
7.5
|
6.8
|
6
|
3.5
|
9.1
|
|
HONG
KONG
|
1.8
|
10
|
0
|
-3
|
3.3
|
7.9
|
7.3
|
6.8
|
6.4
|
2.4
|
-2.8
|
6.8
|
|
MALAYSIA
|
5
|
8.6
|
0.3
|
4.2
|
5.2
|
7.1
|
5.2
|
5.9
|
6.3
|
4.6
|
-1.7
|
7.2
|
|
CHINA
|
7
|
8
|
8
|
8
|
8
|
9.1
|
9.1
|
10.2
|
11.9
|
9
|
9.1
|
10.3
|
|
NEW
ZEALAND
|
3.1
|
3.6
|
3.1
|
4.4
|
3.5
|
4.8
|
2.3
|
1.5
|
3.1
|
0.2
|
-1.7
|
1.5
|
|
AUSTRALIA
|
4.3
|
4.7
|
4
|
3.6
|
3
|
3.5
|
2.7
|
2.7
|
4.3
|
2.3
|
1.2
|
2.7
|
|
INDONESIA
|
0
|
4.8
|
3.3
|
3.5
|
4.1
|
4.9
|
5.6
|
5.5
|
6.3
|
6.1
|
4.5
|
6.1
|
|
U.A.E
|
2.5
|
4
|
5.6
|
2.4
|
5.2
|
5.7
|
8.8
|
8.9
|
7.5
|
7.4
|
-2.7
|
3.2
|
|
U.S.A
|
4.1
|
5
|
0.3
|
2.45
|
3.1
|
4.4
|
3.2
|
3.2
|
2
|
1.1
|
-2.6
|
2.8
|
|
JAPAN
|
0.3
|
1.3
|
0.3
|
-0.3
|
2.7
|
2.9
|
2.6
|
2.2
|
2
|
-0.7
|
-5.2
|
3.9
|
|
U.K
|
1.9
|
3
|
1.7
|
1.6
|
2.2
|
3.2
|
1.9
|
2.8
|
3.1
|
0.7
|
-5
|
1.3
|
With the availability of natural resources and workforce, it
is pretty obvious that Sri Lanka has huge potential of becoming a proliferating
economy in the world. Just as how many were skeptical on countries such as
Indonesia and India, it was the splendor performance of those countries’
economy that had shown the skeptics of how powerful these countries truly are.
Logically speaking, with the ready availability of natural resources and
workforce, combined with the low cost of production, it would be sufficient to
say that global investments would gravitate towards them as time goes by.
“But what about the movement that is gaining momentum to
impeach the President of Sri Lanka on his ‘war crimes’?”
Well, that is a logical concern. Over the years, the Sri
Lankan economy has been relatively resilient toward the civil war. But over the
last 3 years, more growth had been recorded as there is more room for
development that has come to be realized by global investors. And that is
exactly what is going to happen in the coming months. With the global economic
turmoil that Is occurring, and with investors seeking new venues to realize
gains, this political and civil movement to impeach the President, has made
most countries turn their view towards Sri Lanka. Whether or not the President
would be impeached is not the point that I am driving at; But rather the action
that has forced everyone’s attention towards the country. Many (even from
Malaysia) have started venturing into the business sector of Sri Lanka and have
started realizing gains, while the rest hold onto their money with raging skepticism
and unwavering emotional conflict. The choice of being the sheep or the
shepherd truly lies with the individual.
As I believe and have always believed, perspectives need to change with
time, otherwise, we shall never see the opportunities that come by.
Prepared By,
Ashveen Chakravarthy Sekaran
14 April 2012
