Consumers in rural areas in the forefront:

Lanka on track for fast economic growth in 2012

Leading international market research company, Nielsen said that Sri Lanka would record rapid economic growth in 2012, with consumers in rural areas coming to the forefront of economic activity. Nielsen, launching its 2012 Outlook for Sri Lanka, called upon investors and the private sector to focus on the rapidly developing rural areas.

Nielsen forecasts increased consumer spending in 2012, adding that Sri Lankan consumers were aggressively moving towards lifestyle products that have now become essentials and engaging in impulse buying.

Nielsen’s Managing Director in Sri Lanka Shaheen Cader told the launch of the Report that companies should work to leverage the growth momentum.

“Sri Lanka is slightly different from the rest of the world in that we see more growth in 2012.

There is an emergence of a savvy rural consumer that companies need to consider,” he said.

The other key points highlighted by Nielsen include the large-scale buying of vehicles with over 50 percent of Sri Lankan households owning at least one vehicle in Sri Lanka. (There are around three-million vehicles in use countrywide). Vehicle sales and registrations have risen sharply following duty cuts for all categories of vehicles, including hybrid and electric vehicles.

Nielsen, said that there was a trend where consumers were moving more towards borrowing for their spending. Inflation effects resulting in higher food prices remain the main concern towards 2012, even though Sri Lanka has maintained a rate of 7 percent on average this year, Nielsen said.

Meanwhile, Sri Lanka has secured a record US$ 1 billion in foreign direct investments this year, Deputy Economic Development Minister Lakshman Yapa Abeywardene said.”By November 2011 we had posted the highest ever volume of foreign direct investment,” AFP quoted the minister as saying.

In 2010, Sri Lanka raised US$ 516 million in foreign direct investments, compared to the US$ 602 million in 2009.Sri Lanka is attracting many regional investors, with India in the lead.

Indian investors are exploring emerging markets such as Sri Lanka as they offer higher returns than investments in developed countries whose economies are slowing down, PriceWaterhouseCoopers (PWC) officials told a forum in Colombo. Many Indian companies have shown a keen interest in infrastructure, financial services, tourism and healthcare.

Indian firms have acknowledged Sri Lanka’s rapid growth and rising personal incomes, Anand Dikshit of PWC India said. “Indian investors are exploring emerging economies such as Vietnam, Africa and Sri Lanka.”

Sri Lanka is back on the investment radar after the end of terrorism in May 2009. The economic boom has increased imports of machinery, building material, transport, and petroleum products this year.