Economy

SL economic growth modest but strong– ADB

18 Apr 2012 - {{hitsCtrl.values.hits}}

The Asian Development Bank (ADB) yesterday described Sri Lanka’s economic outlook as ‘moderate but still strong’, adding that the economy would grow at 7 percent during 2012 and improve to 8 percent in the coming years amidst a better global economic outlook and growth driven mainly by domestic and foreign investment.
ADB releasing its flagship annual economic publication Asian Development Outlook 2012 (ADO 2012) in Sri Lanka stated that the government’s development policy framework has the laudable aim to raise GDP growth to above 8 percent in the medium term, and nearly double the per capita income from $2400 to $4200.

“ADB supports the government’s gradualist approach to implement its reform plans, which will take time to achieve their full positive impact,” Rita O’Sullivan, Country Director, ADB Sri Lankan Mission said.

She added that the ADB endorses the remarks made by the IMF and other international bodies regarding the policy changes made by the government but noted that the outlook does not reflect any of those policy changes.

“The depreciation of the rupee has done good, and we endorse it since that’s what the country needs in the short term,” O’Sullivan stated.
She also pointed out that the ADB is working with the government to create niche markets for various industries, so that they can function and contribute to economic growth more effectively.

“The apparel industry already has that sort of niche where it focuses neither on the high end market nor the small scale but more in the mid region. This sort of niche is what we’re working with government to create for other industries as well,” the country director stated.

Meanwhile the ADB is also in partnership with the government to develop not only national but also provincial roadways. “We’re working very closely with the government to develop the Kandy and Jaffna expressways,” she assured.

She went on to state that ADB is very keen on improving the capital markets and also assuring that companies have access to funds so that they can contribute more effectively to the growth.

The ADB is also of the view that Sri Lanka is doing well as a member of developing Asia in enhancing regional co-operation and is working well with the region.

Meanwhile, Developing Asia will largely maintain its growth momentum in the next couple of years, despite weak global demand from moderate 7.2 percent in 2011. Growth in the region will ease to 6.9 percent in 2012 before picking up to 7.3 percent in 2013, the ADO 2012 said.

It further stated that Developing Asia’s current account surplus continued to narrow to 2.6 percent in 2011 from 4 percent in 2010, due to moderating demand for exports, the upward impact on imports of solid domestic demand, and higher prices for imported oil and commodities.

The greatest risk to the outlook is uncertainty surrounding the resolution of sovereign debt problems in the euro zone, the ADO 2012 pointed out.

However it added that in the absence of any sudden shocks, developing Asia can manage the effects on its financial markets and trade flows and there is no clear case for policy makers in the region to pursue short term fiscal or monetary stimulus measures.

Economy

SL economic growth modest but strong– ADB

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