Lanka cannot substitute USA, Europe markets right now - Dr Sally

Sanjeevi JAYASURIYA

Irrespective of global economic environment being turbulent, the main markets in USA and Europe cannot be substituted in the short term. National University of Singapore Lee Kuan Yew School of Public Policy Associate Professor Dr Razeen Sally said. He said Sri Lanka needs to have good economic relationships and diversify expert base to sustain growth momentum.

“India is bottoming up and it needs second wave of reforms to maintain 8 to 10 percent economic growth. Sri Lanka needs much more economic integration with India and stronger links with South East Asia, he said speaking at the ninth LBR LBO CFO Forum on global economic outlook for 2012 and opportunities for Sri Lanka held on Wednesday. “The country needs to ensure macro economic stability, right domestic policies and institutions, reverse de-liberalization with more external and internal liberalization, reliable predictable systems and institutions in place. Sri Lanka should work hard to be on the international radar of foreign investors by sending right signals on national reconciliation and multi ethnic society,” he said.

The world economy will see an 8 percent growth led by India and China and the question is whether it could be sustained in the long run.

The prudent macro economic practices enabled Asia to bounced back despite the global crisis. The re-enforce patterns of quick recovery have growth projections for Europe and the USA at 1 to 1.5 percent, China 9 percent, Brazil 4 percent and overall buoyancy growth of 8 percent for Asia, he said.

There is much less optimism in West and countries need to find new world initiatives to generate economic growth. There is a big shift in policies and ideas against free markets and in favour of government intervention. Domestic crisis intervention and emerging protectionism have impacted positively and emerging markets need to shift trade, business and supply chain.

“Intra Asia trade has shown a higher growth rate and there is a chance of the Euro breaking up next year that will lad to a severe recession in Europe. Sri Lanka needs to have scenario planning to mitigate implications to move forward in achieving target economic growth rates,” Dr Sally said.