By Indika Sakalasooriya
International financier and philanthropist George Soros yesterday expressed confidence in Sri Lanka’s economic prospects, though he warned that the country would have to tread carefully as the world economic environment remains “hostile”.

Addressing a packed house at ‘Sri Lanka Economic Forum 2016’ in Colombo, he said his team is currently in Sri Lanka looking for investment opportunities
“In addition to the person from my Open Society Foundations who is in-charge of Asia, my investment person is also in Sri Lanka to look for opportunities.”
Soros said Sri Lanka was a “bright spot” in the bleak world economic picture and claimed that the country’s tourism sector has great potential. 

He praised Sri Lanka for its recent socio-political achievements—a relatively open government, transparency, commitment to democratic practices and rule of law. 

He said Sri Lanka could navigate the tough times with proper vision and stressed that a lot would remain on its willingness to accept the harsh realities.
“Money is not going to pour in here. You have to lower your expectations. It’s a balance; lower your expectations and improve your performance.”
Meanwhile, he regretted being a “messenger of bad news”, as his take on the future of the world economy is extremely bleak.
“We are faced with a very serious problem. I would say it amounts to a crisis; when I look at the financial markets I see a serious challenge, which reminds me the crisis we had in 2008,” he said. 
“I have even told my investment people to be very cautious,” he added.  
Soros said the basis for his pessimism was deflation and the economic turmoil in China. He noted that China’s economic growth is decelerating with its manufacturing slowing down.

“China is now looking for new growth models and has a major adjustment problem.”

Soros also said China’s currency devaluation was transferring problems to the rest of the world. The International Monetary Fund (IMF) recently added China’s renminbi currency to its special drawing rights (SDR) basket. 

While saying that the commodity boom enjoyed by the developing countries has come to an end, Soros said the US Federal Reserve taking the interest rates to the positive territory could create “big problems” to the developing world. 

Commenting on the current deflationary situation, he noted that the stimulus provided by way of lower prices had failed to spur growth world over as people have opted to use the extra cash not for consumption but to service debts. 



Tourism: The ‘bright spot’
The tourism industry is likely to be one of the few bright spots in the Sri Lankan economy in the near future, economic heavyweights said at the Sri Lanka Economic Forum.

“When there are so few investment opportunities, there is space in tourism to attract investment,” global financier George Soros said.
He said that many countries which had similar internal problems are now thriving through tourism, providing a great opportunity for Sri Lanka.
He was saying this despite stressing that Sri Lanka is unlikely to have large investments this year, and the country should lower expectations.
Meanwhile, Harvard Centre for International Development Director Riccardo Hausmann pointed out that Sri Lanka had captured US $ 600 less per tourist in 2013, compared to similar countries. 
“So tourism can grow and bring in higher wages,” he added.

He also said that richer countries earn more, signifying a positive correlation between Sri Lanka’s total economic growth and tourism. 
Sri Lanka attracted 1.27 million tourists in 2013, with US $ 1.72 billion in earnings, or US $ 1,345.92 per tourist.

In 2014, the arrivals increased to 1.53 million tourists, while the income increased to US $ 2.43 billion.

Last year, the government missed its two million arrival target, attracting just 1.8 million tourists.

However, the government proposed to take over the Rs.2 billion tourism promotional fund in the latest Budget to fund the fiscal deficit, putting the industry in panic over how to revitalise growth.

Sri Lanka’s tourist arrival growth rate has continuously decreased since the end of the war, except in 2013 when the past regime changed the arrival counting methodology to reach arrival targets.
(CW)