ADB commends Lanka's economic growth

High agriculture production, tsunami reconstruction accelerates growth

SHIRAJIV Sirimane

ECONOMY: Despite the negative impact of the tsunami, the Sri Lankan economy grew by 6 per cent and this is highly admirable, Country Director Asian Development Bank (ADB) Alessandro Pio said.

Speaking at the launch of the Asian Development outlook for 2006 in Colombo yesterday, he said that the ADB was expecting the economy to grow at around 6 per cent.

"We thought the Lankan economy would grow around 5.5 per cent last year. However the present growth is commendable," he said.

Pio said that the high production in the agriculture sector and accelerated growth in the construction industry mainly for tsunami reconstruction contributed towards the economic growth.

The healthy agriculture growth is expected to continue in 2006 as well.

Country Director said revenue collection too increased by 11 per cent and the budget deficit too had been well controlled.

Asked if the ADB is against providing fertiliser subsidies, he said that more than the subsidies, the Government must ensure to find ways for new technology to roll out in to the farmers from the universities and other such institutions. Government should also try to provide more irrigation facilities for the farmers.

He said there is a lack of an international standard labour force in Sri Lanka mainly due to the lack of knowledge of English. This is another area that needs urgent attention.

"International labour productivity has fallen by 10 per cent and this would create vacuum of labour when it comes to the implementation of IT and for outsourcing projects."

He said that they are happy with the free trade agreements between India and Pakistan. "This has increased trade," he said. However, Sri Lanka should not have too much of FTA's as implementation would be confused.

Overall the Asian economies including Sri Lanka have performed well last year with China and India maintaining around 9 per cent growth.

The Chinese Government is now targeting a slower growth trajectory for the economy as it intends to focus on some of the social and environmental stresses that have emerged as a consequence of rapid economic expansion in recent years.

In India, growth surged to 8.1% in 2005, underpinned by strong performances in industry and services, and a rebound in agriculture from a weak performance in 2004.

ADB forecasts developing Asia will achieve an overall economic expansion of 7.2% in 2006 and 7% in 2007.

Bird flu (also known as avian flu or avian influenza), which has now spread from Asia to Europe, continues to pose a significant threat to human health and econom ic activity in the region and beyond.