ADB backs govt’s bid to raise GDP above 8%

Ramani KANGARAARACHCHI

The Sri Lankan economy is expected to improve in 2013 with a better global economic outlook and growth driven mainly by domestic and foreign investment while the growth is expected to remain around 7 percent in 2012, Country Director Asian Development Bank (ADB) Rita O Sullivan said addressing the media on the launch of its annual economic publication Asian Development Outlook 2012 at Ramada Hotel, Colombo yesterday.

Rita O Sullivan

She said the ADB fully supports the government’s approach to implement its reform plans to raise the gross domestic product (GDP) growth to above 8 percent in the medium term, doubling the per capita income from US $ 2,400 to US $ 4,200.

The ADO’s theme chapter looks at widening inequality, noting that in spite of developing Asia’s great success in raising living standards and reducing poverty, swelling income disparities threaten to undermine progress.

Regional policymakers need to ensure that the benefits of growth are widely shared, the report states. Sri Lanka’s performance in FY2011 reflected the continued progress of the services sector which grew by 8.8% contributing over 60% of GDP.

The tourism sector recorded the best achievement with nearly 31% growth in visitor arrivals.

Foreign direct investment inflows exceeded the government target of $ 1 billion with an influx of investment into tourism and apparel sectors and information technology industries. Net inflows to the capital and financial accounts largely offset the current account deficit. Overall, Sri Lanka scores a good performance rating.

The report also highlights challenges for policymakers in the region, including tackling income inequality and reducing pressure on natural resources, both of which threaten the sustainability of future growth and poverty reduction.

These will require stepped up investment in rural areas and more comprehensive social security safety nets, as well as stronger management of water and other natural resources, and improving energy efficiency.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is represented by 67 members, 48 from the region.