Lanka's GDP growth to accelerate - ESCAP

Ridma DISSANAYKE

The economic recovery that began in the second half of 2009 gained momentum and GDP growth is estimated to have accelerated sharply to eight percent in 2010 from 3.5 percent in 2009. according to the Economic and Social Survey of Asia and the Pacific 2011 on Sri Lanka.

With the end of the civil war in Sri Lanka,reconstruction activities in those areas and enhanced tourist arrivals are expected to provide a boost for economic growth,which should reach eight percent this year despite damage caused by floods for in the first quarter of 2011.

This information was contained in the United Nations annual regional social and economic report compiled by the UN Economic and Social Commission for Asia and the Pacific (ESCAP) that was released yesterday at the Sri Lanka Foundation Institute (SLIF). This report regards with the Asia-Pacific developing countries to continue driving the global economy in 2011,however high food and fuel prices and volatile capital inflows pose fresh challenges.

UN annual regional social and economic report revealed that the budget deficit is estimated at eight percent the GDP for 2010 as compared to the 2009 deficit of 9.9 percent. The improvement in the fiscal situation was helped by the considerable recovery in government revenue due to the expansion of economic activities and through savings in government expenditure in certain areas achieved while maintaining public investment at the targeted level.

ESCAP estimates show that rising food and oil prices could lead to 42 million additional people in poverty,joining the 19 million already affected in 2010. in a worst-case scenario with food price inflation doubling in this year and average oil prices at US $130 per barrel,the achievement the Millennium Development Goal (MDG) for poverty could be postponed by up to half a decade in some developing countries in the region.

ESCAP estimates that persistent high oil price may lead to economies experiencing a negative impact of GDP growth in 2011 of up to one percent. The impact of oil prices on growth in Asia-Pacific is significant due to high energy intensity of production in the region.

The report urges the G20 group of nations,as a major forum for global policy coordination on economic issues,to act decisively to moderate the volatility of oil and food prices. This could include G20 regulating commodity markets to reduce speculation.

United Nations Information Center (UNIC) Director Douglas Keh, ESCAP Economic Affairs Officer Dr Muhammed Hussain Malik, Former Deputy Governor of the Central Bank of Sri Lanka W A Wijawardhana and Colombo Policy Studies Institute's Dr Dushini Weerakoon were took part in this ESCAP report launching ceromony.