The document provides an economic summary and outlook for 2012. It discusses several key points: - Credit growth in Sri Lanka hit a new high in 2011, driven mainly by imports and trade credit. The central bank raised interest rates for the first time in five years to curb credit and inflation. - Sri Lanka's tourism sector saw strong growth in 2011 and is projected to continue growing in 2012, with arrivals expected to increase by over 50%. - The global economic outlook remains uncertain due to the ongoing eurozone crisis and potential impacts on oil prices and trade. Emerging markets will likely account for most global growth in 2012. - Key factors for Sri Lanka's economy in 2012 include managing high credit growth

1. < Research & Development Unit > ECONOMIC CAPSULE January 2012

3. ECONOMY & BUSINESS NEWS

13. IMF World Economic Outlook Projections < Research & Development Unit > (Percent change unless noted otherwise) 1 The quarterly estimates and projections account for 90 % of the world purchasing-power-parity weights. 2 The quarterly estimates and projections account for approximately 80 % of the emerging and developing economies. 3 Simple average of prices of U.K. Brent, Dubai, and West Texas Intermediate crude oil. The average price of oil in U.S. dollars a barrel was $104.23 in 2011; the assumed price based on futures markets is $99.09 in 2012 and $95.55 in 2013. The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere. Financial conditions have deteriorated, growth prospects have dimmed, and downside risks have escalated. This is largely because the euro area economy is now expected to go into a mild recession in 2012 as a result of the rise in sovereign yields, the effects of bank deleveraging on the real economy, and the impact of additional fiscal consolidation. Source: IMF World Economic Outlook Update – January, 2012 The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC 2010 2011e 2012f 2013f World Output 1 5.2 3.8 3.3 3.9 Advance Economies 3.2 1.6 1.2 1.9 United States 3.0 1.8 1.8 2.2 Euro Area 1.9 1.6 -0.5 0.8 Germany 3.6 3.0 0.3 1.5 France 1.4 1.6 0.2 1.0 Italy 1.5 0.4 -2.2 -0.6 Spain -0.1 0.7 -1.7 -0.3 United Kingdom 2.1 0.9 0.6 2.0 Japan 4.4 -0.9 1.7 1.6 Emerging & Developing Economies 2 7.3 6.2 5.4 5.9 Developing Asia 9.5 7.9 7.3 7.8 China 10.4 9.2 8.2 8.8 India 9.9 7.4 7.0 7.3 Brazil 7.5 2.9 3.0 4.0 World Trade Volume 12.7 6.9 3.8 5.4 Oil 3 27.9 31.9 -4.9 -3.6

18. FINANCIAL SECTOR NEWS

22. ANALYSIS & FORECAST

23. CBSL Projections for 2012 < Research & Development Unit > Source: CBSL, Road Map - Monetary & Financial Sector Policies for 2012 & Beyond The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC Indicators 2011 (Est/Prov) 2012 (Expectation) Real GDP Growth (%) 8.3 8.0 Agriculture sector (%) 2.0 7.3 Industry sector (%) 10.1 9.0 Services sector (%) 8.6 7.7 GDP (USD bn) 59.1 66.0 GDP per capita (USD) 2,830 3,129 Consumer Price Inflation (%) (Average) 6.7 5.5 Exports (USD bn) 10.5 12.5 Imports (USD bn) 20.0 23.4 Workers’ Remittances (USD bn) 5.2 6.5 Tourist Arrivals (‘000) 850 Over 1000 Earnings from Tourism (USD bn) 0.8 1.2 FDI (USD bn) 1.0 2.0 Government Inflows (USD bn) 2.7 2.5 Debt/GDP (%) 78 75 Public Investment/GDP (%) 6.0 6.6 Foreign Funds into Banks – Tier II Capital (USD bn) 0.1 1.0 Fiscal Deficit (% of GDP) 7.0 6.2

27. The views expressed in Economic Capsule are not necessarily those of the Management of Commercial Bank of Ceylon PLC The information contained in this presentation has been drawn from sources that we believe to be reliable. However, while we have taken reasonable care to maintain accuracy/completeness of the information, it should be noted that Commercial Bank of Ceylon PLC and/or its employees should not be held responsible, for providing the information or for losses or damages, financial or otherwise, suffered in consequence of using such information for whatever purpose. Research & Development Unit “ PR is the art of putting smiles on people's faces&quot;