Sri Lankan CEOs report 2018 business well below expectations

Business for Sri Lankan executives was well below expectations in 2018 according to a new survey report from local management consultancy MTI Consulting.

Now into its eighth year, MTI Consulting’s annual Sri Lankan CEO survey has revealed 2018 to be the worst year so far in terms of failing to live up to business expectations. Just four percent of the 100 or so cross-sector CEOs questioned reported business performance in 2018 to have exceeded expectations, while a massive 75 percent stated performance was below what was expected – a record high since the survey’s inception.

The 75 percent figure is 15 points up on last year’s review of 2017, and more than doubles the 32 percent of businesses which recorded below par performance just five years ago in 2013 – a year in which 36 percent of businesses outperformed expectations. Only one fifth of respondents meanwhile were accurate in their 2018 forecasts – also the lowest recorded number, slipping from a high of 45 percent in 2013.In terms of economic projections for this year, 45 percent of the CEOs surveyed are expecting a decline in the Sri Lankan economy in 2019 – again, the highest survey figure recorded, and by some margin, with the 31 percent forecast for decline in 2016 the previous high. And while approximately half of the CEOs predict a stabilisation of the local economy this year, just seven percent are envisioning an acceleration, compared to 16 percent last year.

The down-beat mood follows from both domestic concerns – such as, following the country’s constitutional crisis toward the end of last year, the 60 percent of execs who cited political instability as a major concern – and a gloomy outlook for the global economy, with a paltry 2 percent of local business leaders predicting the economy will take-off in 2019 and only 27 percent expecting a recovery. Six out of ten meanwhile believe it will remain depressed.

This general negativity for the short-term global economy mirrors the mood from PwC’s recent global CEO survey of more than 1,350 leaders (with ASEAN CEOs found to be the most pessimistic for the year ahead), but far exceeds the worldwide numbers, which, while taking the biggest year-on-year hit for positive growth expectations, still remained at 42 percent.

Perhaps naturally, the below-expected 2018 performance coupled with a particularly unfavourable global economic outlook has impacted responses as to business performance expectations for this year. Although only four percent reported performance above expectations in 2018, a quarter of the Sri Lankan business leaders surveyed still expect growth for their organisations this year. This figure however is balanced by roughly the same number who expect negative growth, and marks a drastic decline from the around 45 percent range for growth expectations recorded in the past two surveys.

“The long term trend (since 2012) of the businesses environment performing below expectations recorded its highest peak this year, with 75% of the CEOs expressing dissatisfaction on the performance of their industry in 2018, a result surpassing the previous peak of 61% recorded in 2016. The lackluster performance was no doubt on the back of a weak economy and a turbulent political environment, notably the constitutional crisis and sharp decline in the external value of the rupee that erupted in the latter part of 2018,” the report concludes.