Global crisis to have impact on FDI

Ramani Kangaraarachchi

Global financial crisis is more serious than we thought earlier. Emerging markets had been fairly resilient till September 2008 but now face greater risks and it will be difficult to obtain foreign direct investments and aid, Director Institute of Policy Studies Dr Saman Kelegama said.

He was addressing a seminar on Global Financial Crisis and its Impact on the Sri Lanka Economy held in Colombo recently.

He said that developing countries like Sri Lanka will have a huge impact as short term investments will be repatriated out of the country for investment and consumption purposes. Slowing down global growth will have an impact on the real economy as it will be difficult to sustain the existing export growth, he said.

As Sri Lanka does not have a sophisticated financial market with many instruments with large international exposure and capital account is only partially liberalized.