However just five months ago the same bank was skeptical about Sri Lanka’s outlook due to budget and current account deficits as well as concerns about the investment and business climate.
The visiting HSBC research staff that witnessed the mass scale constructions taking place then concluded that the looks could be deceiving and went on to say the country was losing her sparkle.
However, changing its perspective, HSBC last week said Sri Lanka was now their favourite frontier market in Asia.
“However, overall we feel that Sri Lanka is a country where the health of the banking system is improving, infrastructure is getting better and a stable, pro-development government is helping to lower the cost of doing business to a level that is very competitive compared with that of peers,” HSBC said in its regular equities research report titled ‘The Flying Dutchman’.
According to government statistics, Sri Lanka’s economy grew at 7.6 percent in 1Q14 accelerating from 6.1 percent a year ago and the trade gap continued to narrow in April by 17.7 percent to US $ 682. 2 million amid weak domestic credit.
Meanwhile, the business sentiment, though still not great, has inched higher in the past few months, as measured by the LMD-Nielsen business confidence index, HSBC said.
The banking giant largely attributed Sri Lanka’s growth to tourism, real estate and port related infrastructure which they believe should help turn Sri Lanka into a major logistics hub.