The Colombo Bourse closed positive in September, with the benchmark All Share Price Index (ASPI) rising 2% MoM to 11,336 points (an increase of 221 index points MoM).
Meanwhile, the more liquid S&P SL20 index rose 2.1% MoM to 3,198 points (an increase of 67 index points).
The Colombo Consumer Price Index (CCPI – Base year 2021) increased by 1.7 points to 191.8 index points, whilst point-to-point inflation was recorded at 1.3% in September 2023 (vs. 4.0% in August 2023).
The Monetary Board of the Central Bank of Sri Lanka (CBSL), at its meeting held on 05 October 2023, decided to further reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) by -100bps to 10.% and 11.%, respectively.
Sri Lanka has recorded a slowdown in contraction in Gross Domestic Product (GDP) in 2Q2023 declining by -3.1% (vs. -11.5% contraction in 1Q2023). This was in line with our expectation as the economy gears up for a growth phase after the contractions recorded in the last few quarters driven by the high interest rates, high inflation, and contraction of disposable income from the rise in income taxes which highly discouraged the local demand conditions.
Given these circumstances being indicative of a gradual recovery in the nation’s economic situation, we expect GDP to contract by -3.5% YoY for 2023E and expand by +1.5% YoY for 2024E.
Tourist arrivals to Sri Lanka (SL) declined by -18% MoM to 111,938 tourists in September 2023. Consequently, the average daily arrivals per day decreased by -15% to 3,731. The first nine months of 2023 saw tourist arrivals exceeding the 1 million mark.
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