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Sri Lanka Purchasing Managers’ Index - January 2021

Purchasing Managers' Indices for both Manufacturing and Services activities expanded in January 2021.

Manufacturing PMI remained expanded in January 2021 recording an index value of 60.2 owing to the expansion in New Orders and Production. The increase of Stock of Purchases sub-index also contributed to the overall expansion of the PMI.

Starting the year with a positive note, services sector PMI recorded a value of 56.2 in January 2021. This indicates a further recovery in the services sector, which was affected by the second wave of COVID-19 pandemic. This increase was underpinned by the expansions observed in new businesses, business activities and expectations for activity.

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External Sector Performance - December 2020

Merchandise exports recovered in December 2020 from the impact of the second wave of the COVID-19 pandemic in the country, while merchandise imports continued to decline on a year-on-year basis supported by the continuation of restrictions on non-essential imports and comparatively low global oil prices. Overall, the trade deficit contracted significantly by US dollars 2.0 billion in 2020 compared to 2019. Recording the historically highest monthly inflow, workers’ remittances continued to support the external sector resilience in December 2020 as well. In the financial account, both foreign investment in the government securities market and the Colombo Stock Exchange (CSE) recorded marginal net outflows in December 2020. At the end of the year, gross official reserves stood at US dollars 5.7 billion. During 2020, the Sri Lankan rupee depreciated by 2.6 per cent in 2020. The exchange rate experienced some volatility in December 2020 as well as during the period thus far in 2021.

Swarnamahal Financial Services PLC - Repayment of 50% of the Remaining Deposits

Consequent to the Order issued by the Monetary Board of the Central Bank of Sri Lanka to resume business of Swarnamahal Financial Services PLC (SFSP) for a limited time on a conditional basis, only for the purpose of repayment up to fifty percent (50%) of the remaining deposits of the Company (repayment plan) under the supervision of the Panel of Management appointed by the Monetary Board, which was communicated by our Press Release dated 12th January 2021, SFSP has taken measures to implement such plan. Accordingly, 50% of the remaining value of deposits of SFSP, after deducting 30% repayment already made and the eligible compensation under the Sri Lanka Deposit Insurance and Liquidity Support Scheme, will be repaid commencing from 3rd February 2021.

CCPI based Inflation decreased to 3.0 per cent in January 2021

Headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2013=100) decreased to 3.0 per cent in January 2021 from 4.2 per cent in December 2020. This was due to the statistical effect of the high base prevailed during January 2020. Meanwhile, Food inflation (Y-o-Y) decreased to 6.8 per cent in January 2021 from 9.2 per cent in December 2020. Further, Non-food inflation (Y-o-Y) decreased to 1.4 per cent in January 2021 from 2.0 per cent in December 2020.

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