Sri Lanka To Emerge As An Exciting Long-Term Consumer Play

The near-term consumer outlook for Sri Lanka is moderately bright. Tourism levels in the country are set to experience an expansion in 2011, and the continued increase in remittance flows should provide a strong fillip to the domestic food and beverage sector's growth. On the flip side, increasing inflationary pressures could prompt the central bank to hike rates, thus placing downside pressure on private consumption growth. That said, we do not see this as a major cause for concern as policy rates remain way below historic highs. Over the longer term, Sri Lanka should emerge as a very exciting long-term consumer play thanks to improving investment confidence and favourable labour dynamics.

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