Develop sufficient spaces within economies to face complexities -
President
We have to ensure that we develop sufficient
spaces within our own economies so as to be able to comfortably face the
inevitable complexities in the face of global challenges, President
Mahinda Rajapaksa said.
“In our view, Individual policy interventions
or ad-hoc measures which target just one or two outcomes are often
flawed and almost always, do not provide the desired results. Such
responses are essentially short-term, and sometimes lead to new
difficulties. Although it may sound simplistic, I must say that, for
growth to be sustained, we as nations, must get our basics and
fundamentals right,” President Rajapaksa said delivering the keynote
address at the Commonwealth Business Forum in Burswood Complex, in
Burswood yesterday.
Full text of the speech:
At the outset, I wish to express my gratitude to the organizers of
the Commonwealth Business Forum for inviting me to share my thoughts on
the topic ‘The Indian Ocean and the Pacific Rim: fastest growing
markets”.
In a world that is increasingly complex, where markets and economies
seem to be in a constant state of uncertainty and turmoil, the only
geographical area that appears to be somewhat stable is the Asia and the
Pacific region. In fact, today, it is the Asian and Pacific economies
that are universally accepted as playing the key role in global growth
and stability. It is therefore not surprising that the much talked-of
BRIC nations, consist of three countries from the Asian Region, India,
Russia and China, and that further confirms the growing importance of
the region.
Research findings
Asia’s importance which has been clearly visible over the past couple
of decades is probably best reflected in the recent research findings of
an ADB study. According to the study conducted by the ADB this year,
Asia’s share of the global economic output was as high as 58 percent in
the year 1700. Thereafter, over a period of 260 years, that is from 1700
to about 1960, Asia’s share declined steadily, and fell to around 16
percent by 1960. However, over the past 50 years, Asia’s share has been
steadily climbing once again, and the ADB projections are that by the
year 2050, Asia’s share of global output could reach around 53 percent.
These projections are indeed remarkable since the turn-around is
expected to be recorded in just 90 years, while the decline was
experienced over about 260 years.
President Mahinda Rajapaksa. Picture by Sudath Silva |
Asia’s fast growth track is also evident from many of its indicators
that we see at present. But, we must appreciate that this continuous
transformation would not take place unless the Asian nations continue to
take the right steps. That is why the current political and economic
leaders have a great responsibility in guiding the Asian nations to
prosperity, in a sustainable path. Such a journey will encounter many
risks and challenges, some of which I will now briefly outline.
Going forward, one of our key challenges will be how we balance
‘regulation’ against ‘innovation’. At the same time, our nations will
have to continuously stimulate our economies, and not allow our systems
to falter or fail. We will also have to face the challenge of dealing
with commodity markets that are increasingly being used as financial
markets by a large segment of investors.
Political and social unrest
Today, we see hedge funds investing in orange juice, wheat flour and
rice as financial instruments. Such investment appetites place enormous
pressures on global commodity prices, which, in turn, challenge the
political and economic structures of many nations.
We must also understand that the fast growth in many Asian nations
raise expectations of its people, who look for better standards of
living and greater well-being. Fulfilling these expectations is another
major task for Asian political and economic leaders. At present, many
advanced nations suffer from high unemployment which has resulted in the
first signs of political and social unrest being felt in those
societies. Such situations, if allowed to escalate unchecked, could give
rise to more serious political problems which could further threaten
global economic stability. It is therefore imperative that the more
advanced nations respond quickly and effectively to deal with the rising
inequalities and unemployment levels in their societies, without
allowing that situation to reach unacceptable proportions.
Economies operate on the bed-rock of confidence. If confidence levels
decline, rational economic activity that we take for granted, is damaged
at the very foundation. In that regard, it is essential that world
leaders search for proper responses and act decisively to regain and
restore confidence. The biggest concern amongst economic players today,
is that clear economic decision making has been too little, and too
late. It is therefore time for advanced economies to respond to the
growing crises, and to do so quickly and collectively. Otherwise, we
would find that the situation would become much worse, and perhaps even
reach a point of no-return.
Policy agenda
Over the past six years, we in Sri Lanka, have been successful
because we have been able to provide a policy consistency and clarity in
our economy. Mahinda Chinthana, the policy agenda of the government
clearly spelt out our vision and the programme of action that we needed
to follow.
We have acted quickly and confidently, in keeping with our culture
and the aspirations of our people and faced challenges directly.
We gave equal priority to the several macro-fundamentals of our
economy, including unprecedented investment in infrastructure, resulting
in substantial improvements in the recent past, which are worthy of
mention; economic growth up from 6 percent to 8 percent, unemployment
down from 8 percent to 4.3 percent inflation down from 28 percent to 6
percent, Debt to GDP levels down from 103 percent to 79 percent, budget
deficits down from over 10 percent to 6.8 percent, foreign reserve
levels up from 1 1/2 months of imports to 5 1/2 months of imports,
Global Competitiveness Index improving from 79th position to 52nd
position, Doing Business Ranking, improving from 102nd level to 89th
level, infrastructure development effort continuing without
interruption, poverty down from 22 percent to 8 percent, political
stability being maintained in times of great political chaos in the
world.
We believe one of the reasons why Sri Lanka has been able to achieve
these improvements was the clarity and confidence we provided to our
stakeholders. We implemented balanced policies that embraced all vital
aspects of the economy simultaneously.
It is worth noting that these achievements were possible in the
context of conditions of peace and stability which we attained in Sri
Lanka after the eradication of terrorism. An end to terrorist violence
was absolutely essential to move the country forward along the path of
economic and social development.
Peace and prosperity
Our initiatives today are multi-pronged. The spirit of inclusivity to
which we are deeply committed, is the basis of all our programmes of
reconciliation. Resettlement of those displaced by the conflict,
re-integration of ex-combatants, a political dialogue with
representatives of all communities and strengthening of electoral
mechanisms, especially at the grassroot level, are aspects of this
process.
The economy of the area, previously affected by the conflict, is
growing today by 22 percent. We await the submission next month of the
report of the Lessons Learnt and Reconciliation Commission, a home grown
institution which I appointed to help leave behind us the pain and
anguish of the past and guide the nation towards an era of peace and
prosperity.
In our view, individual policy interventions or ad-hoc measures which
target just one or two outcomes are often flawed and almost always, do
not provide the desired results. Such responses are essentially
short-term, and sometimes lead to new difficulties.
Although it may sound simplistic, I must say that, for growth to be
sustained, we as nations, must get our basics and fundamentals right.
Global challenges
At the same time, we have to ensure that we develop sufficient spaces
within our own economies so as to be able to comfortably face the
inevitable complexities in the face of global challenges.
It is now time for the world in general, and Asia in particular, to
search for and implement appropriate medium to long term strategies.
Such an approach would help countries to develop the ability to move
along a focused growth path, even when the challenges become tougher.
The successes Asia has been able to enjoy over the past several years
have been many. The results that Asia has been able to display have been
impressive.
The growing level of prosperity that Asia has been able to provide
for its people has been satisfying. Asia now needs to continue this
journey in a sustainable manner. To do so, it will be vital that Asia
maintains its growth momentum and remains financially strong. That is a
responsibility Asia owes to its people.
About one half of the world’s population live in Asia. That is why
our actions will be highly relevant in a global context, and that is why
if we maintain our success rate, the beneficiaries will be the greater
part of humanity. If we are successful and continue to be successful, we
will enhance the living conditions and sustainability of all these
people, and we will leave behind an inspiring and everlasting legacy.
In conclusion, I wish to take this opportunity to extend a warm
invitation to all of you to come to Sri Lanka in 2013, when the next
CHOGM will be held in Colombo. I firmly believe that it will be a
memorable experience for you.
It is my fervent wish that our collective efforts in relation to
delivering prosperity to our people would endure the test of time.
May the blessings of the Triple Gem be upon all of you! |