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| Monday, 21 June 2004 |
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Lanka's economic growth promising provided downside risks are mitigated Looking ahead Sri Lanka's economic future prospects of activity a sustainable high economic growth appear to be promising, provided the downside risks are mitigated, according to the Sri Lanka Freight Forwarders' Association (SLFFA) in their annual report. The annual general meeting was held last Friday in Colombo. Following is the full text: "The economic recovery, which commenced in 2002, was further consolidated during the year 2003 mainly due to the continuation of sound macroeconomic policies and speedier implementation of structural reforms. Sri Lanka's economy recorded a broad based 5.9 percent real economic growth benefiting from favourable domestic factors and external environment. Recording of a growth rate of over 5 percent in all four quarters in 2003 proves that the economic recovery was continuous. Thus, the positive growth rates recorded in all three production sectors, i.e. agriculture, industry and services reflects that the growth was broad based. The external sector, which showed a better performance in 2002, improved further in 2003, strengthening the resilience of the economy. The export sector recovered in 2003, continuing the growth momentum that began in late 2002 after one and a half years of contraction experienced prior to that. Exports in US dollar terms increased by 9% in 2003 in contrast to a decline of 2% in 2002. It is noteworthy to highlight that both a volume increase (3.5 percent) and a price increase (5.5 percent) contributed for considerable growth in exports. Export earnings amounted to US dollars 5,113 million in 2003, compared with US dollars, 4,699 million in 2002. Imports grew by 9 percent to US dollars 6,672 million in 2003 compared to 2 percent in 2002 reflecting the economic recovery and the reduction of the import surcharge from 40 percent to 20 percent. Demand for immediate goods increased due to the recovery in exports and domestic market oriented industrial activity, while demand for investment and non-food consumer goods increased reflecting improved investor and consumer confidence. The import volume index increased by 11 percent, while the unit price index declined by 2 percent in 2003, high petroleum prices notwithstanding. Although, there has been a considerable increase in imports, increased inflows from services and an improvement in the income account reduced the deficit in goods, services and income account neutralizing the impact of increase in imports. The services account registered a higher surplus for the third consecutive year, registering a net inflow of US dollars 396 million, a 34% increase over the previous year. The improvement in the services account was mainly brought about by higher receipts from travel and transportation services. Net transportation services, which include passenger fares, freight services and port related earnings, increased by 10% to US dollars 201 million owing mainly to higher tourist arrivals. Although activities relating to transhipment cargo handling increased during the year, foreign receipts increased only marginally due to more competitive prices offered for services at the Colombo port. Looking ahead, Sri Lanka's future prospects of achieving a sustainable high economic growth appear to be promising provided the downside risks are mitigated. The risks arise mainly from the failure to pursue the peace initiative and the abrogation midway of the needed structural reforms for laying the foundation for a sustainable high quality long-term growth". |
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