Sequel to measures taken by Govt:
Lanka’s economy to grow around 5.5% in 2009
RAMANI Kangaraarachchi
Sri Lanka’s economy is expected to grow around 5.5 percent in 2009
following the measures taken by the government to improve the liquidity
of the financial sector, introduction of the stimulus package and
further strengthen domestic demand, said Deputy Director, Institute of
Policy Studies, Dr Dushni Weerakoon said.
She was speaking at the launch of the Economic and Social Survey of
Asia and the Pacific 2009 at the Sri Lanka Foundation Institute in
Colombo yesterday.
The Economic and Social Survey of Asia and the Pacific 2009 is the
annual flagship publication of the United Nations Economic and Social
Committee on Asia and the Pacific (ESCAP).
She said that the global slow down that has come in the aftermath of
the financial crisis is having an adverse impact on the real economies
of South Asia. However, the adverse impact is not as strong as in some
other, more open economies of the Asia Pacific region.
Therefore, an estimated 2008 GDP growth of six percent in Sri Lanka
is encouraging, given the global recession, high and volatile oil
prices, sharp increases in food prices, and a tight anti-inflationary
monetary policy. A significant improvement in the performance of the
agriculture sector helped to check an even sharper deceleration in
growth from 6.8 percent in 2007 .
According to the survey, inflation in Sri Lanka continued to rise. In
2007 it was 15.8 percent and estimated at 22.6 percent for 2008.
The surging global prices for fuel oil and staple food drove the high
inflation. Inflation has been driven up in all countries of South Asia,
partly by unrelenting pressures from higher international commodity
prices.
The budget deficit remains high although the government took measures
to enhance its revenue, manly by broadening the tax base, changing the
tax rates to provide some exemptions to encourage development in
specific sectors, and improving tax administration.
The surge in prices of fuel, oil, food and other commodities created
severe problems for the external balances of most countries in South
Asia.
However, Sri Lanka recorded a growth of 12.2 percent in exports and
10.2 percent in imports in 2007. Growth in exports decreased to 6.5
percent in 2008. Growth in exports of agricultural commodities remained
strong and growth in exports of industrial products was slow according
to the survey.
Poverty remains a major problem for most countries in South Asia and
economic and social inequalities remain widespread.
The survey points out that the development of human resources is
essential to benefit from employment, with social safety nets for the
poor and vulnerable.
Lack of physical infrastructure is a major impediment to business
growth in South Asia.
Speaking about the Global Economic Crisis and Sri Lanka, Senior
Lecturer, Colombo University, Dr Sirimal Abeyrathna said lower import
expenditure, downward trend on inflation and lower interest around the
world and policy focus on domestic agriculture are the positive facts
towards Sri Lanka. |