First Capital Expects a 2.0%-3.0% GDP growth for 2024; Downgrade from Previous Estimate.

 “Investment Strategy 2024” virtual forum, hosted by First Capital Holdings, was held on January 30th, 2024, with the theme “Reforms to Stay Course with Bets on Elections.”

Panellists for this event featured Dr. Nishan de Mel, the Executive Director of Verite Research; Vish Govindasamy, Deputy Chairman of Sunshine Holdings PLC; and Dimantha Mathew, Chief Research & Strategy Officer at First Capital. During the event, Dimantha Mathew and the Assistant Vice President (AVP) of First Capital Research, Ranjan Ranatunga, took the audience through the outlook on inflation, interest rates, and the equity market.

Dr. Nishan de Mel expressed, “Sri Lanka is out of the woods when its debt becomes sustainable, and debt sustainability comes not only with external debt restructuring but also with the ability to access international financial markets. To do that, our country’s credit rating has to go above B- at least up to B.” He further added, “The real test is when the global community, recognizing Sri Lanka’s credibility, deems it trustworthy, good for the money , and capable of achieving a credit rating of B, as evaluated by reputable agencies.”

Responding to a question about the biggest drivers of growth in 2024, Vish Govindasamy commented “In my view, the tourism industry stands out as a key catalyst for growth in 2024. It represents low-hanging fruit, ripe for cultivation. I firmly believe that directing more focus and resources towards bolstering tourism can yield significant dividends. Sri Lanka has received favourable reviews as a favourite destination, and with the right strategies in place, I am optimistic that we can easily surpass the projected 1.9 million tourist arrivals forecasted by FCR. Enhancing the overall experience for visitors should be a priority, ensuring that their journey is comfortable and memorable.”

He further added “Undoubtedly, addressing the challenges faced by our national airlines is paramount. Improving connectivity, particularly with India, holds immense potential. With India experiencing a growing travel trend, tapping into this vast market presents a tremendous opportunity. Moreover, the affordability of traveling to Sri Lanka compared to domestic travel within India makes us an attractive option. We must capitalize on this advantage by streamlining processes and enhancing accessibility to lure more Indian tourists to our shores”

Dimantha Mathew discussed the current inflationary trends, noting, “Presently, we’re facing significant supply-side challenges due to weather conditions, resulting in heightened food inflation. Historically, during the November to January period, we’ve observed a recurring pattern of food inflation, typically followed by stabilization as supply normalizes through imports and seasonal changes. However, this time, the introduction of VAT adds complexity to the situation. Nevertheless, when considering the base effect from the previous year, our concerns might not be as dire. Projections suggest that inflation may peak around the 7% mark this year before gradually receding, primarily due to the influence of a higher base effect.

First Capital, the pioneering investment institution and non-bank market leader in primary dealing, is an organization that aims to establish itself as a catalyst for growth in capital markets, embodying the ethos of “Performance-First” and with a vision to enhance the lives of all Sri Lankans through financial solutions. The “Investment Strategy 2024” virtual forum served as an invaluable platform for investors and financial knowledge seekers to deepen their understanding and make well-informed decisions amidst the evolving economic landscape.


About First Capital Holdings PLC:

First Capital Holdings PLC is a member of the Janashakthi Group, focused on delivering ‘Performance First’ through its operations as a primary dealer, corporate finance advisor, wealth manager and stockbroker.

With over four decades of expertise in providing capital market solutions, First Capital Holdings PLC is a listed full-service investment institution in Sri Lanka. First Capital Holdings PLC is rated [SL] A with Stable outlook by LRA.

The Board of Directors of First Capital Holdings PLC comprises of Nishan Fernando (Chairman), Manjula Mathews (Deputy Chairperson), Dilshan Wirasekara (Managing Director / Chief Executive Officer), Ramesh Schaffter, and Chandana de Silva.