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| Sunday, 2 January 2005 |
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Economic Changes in 2005 and Sri Lankan Exports by Hemal Dias, General Manager - International Marketing - Coco Lands International Co. Ltd., The year 2004 has come to its end with many ups and downs in the Global economies which directly affected emerging countries like Sri Lanka significantly. The knowledge and economic indicators of potential markets around the world would be an added advantage for our export-oriented companies before finalising their export marketing strategies.
But arriving at meaningful economic and market predications for the year 2005 is difficult for many International Marketers, Banks world over forecast the experience a moderate slowdown for the global economy in 2005 due to instability of oil prices, the US dollar weakening against the major currencies, interest rate hikes in the U.S. and the ongoing Iraq conflict which has so far contributed disastrous repercussions to the world at large. According to the available global economic data it predicted that the world economy would grow 4.2 to 4.3 per cent in 2005, compared with an estimated 5 per cent growth in 2004 which illustrated real-life lessons with the highest oil prices in recent history. The global economy, which enjoyed high growth this year (2004), will undergo a slowdown next year (2005), due to downside risks caused by a weak dollar, U.S. rate hikes and a revaluation of the Chinese Yuan. The Global economic forecast based on reports from the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD) and the recent economic research studies published by the London School of Economics indicated that the U.S. economy would record gross domestic product (GDP) growth of 3.3 per cent to 3.5 per cent in 2005, down from an estimated 4.3 percent in 2004. This can be a worrying factor for even developed economies such as Japan, the EU member states as US economists would do anything and everything to maintain the US leadership position in global markets. Despite improved corporate spending and flexible government expenditure as well as solid export growth, the U.S. economy will face a possible setback next year due to a contraction in private spending while consumer confidence will drop to record levels in the first quarter of 2005. China will maintain its commendable position in the global economy with it closely guarded trade and economic policies and forecast to sustain high growth this year on the back of active private spending and facilities investment. The world's fastest-growing economy is expected to grow from 7.5 to 8 per cent in 2005, compared with the 9 per cent growth in 2004. China's economic growth will slow to a moderate pace due to a slowdown in export growth and the Chinese government's action to cool down the heated economy. The Japanese economy, which did a turn around this year after a decade-long economic slump, is again expected to retreat next year, owing to soaring oil prices and slowing U.S. and Chinese economies. Despite steady growth in private spending, Japan is forecast to grow by 1.8 to 2.3 per cent next year, down from this year's estimated 4.4 per cent expansion. Europe is expected to see its GDP growth stay between 1.8 and 2.2 per cent next year, similar to this year's estimated 2.2 per cent growth, as recovery in domestic demand will offset an expected setback in exports in the region while the U.K. economy is forecast to grow by 2.5 to 2.6 per cent in 2005. India will become a focal point in the global economy with a steady progress of 6.2 per cent to 6.9 per cent in 2005. India is changing rapidly but more than "westernising" the country and its people are "modernising" with the global trends. Sri Lankan companies can explore the opportunities in India if we study the markets carefully and strategic entry into Indian markets can be a wise marketing approach if it is executed well. The best advise to our manufacturing companies that, to utilize. Our own expertise and knowledge as Sri Lankan professionals has the opportunity to expose to the world much earlier than India opened its gates to the outside world. Russia is expected to maintain a steady GDP growth between 5.5 per cent to 6.6 per cent. The recent acquisition of Yuganskneftegas oil fields in Siberia by an unknown Russian company (information says that, this company is backed by the Russian Government) and is a clear indication that the Kremlin is well set for a major economic progress in the coming year or so. The economic growth for South Asian nations is expected to inch down to 5.4 per cent next year from this year due to the depreciation of the U.S. dollar coupled with the slowing Chinese economy. Among Asian nations, South Korea, excluding Japan, is forecast to suffer from the lowest economic growth of 4-4.5 per cent next year due to sluggish domestic demand and a slowdown in export growth. Hong Kong is expected to grow by 4-5 per cent in 2005, while the GDP growth for Taiwan is forecast to register 4.1 per cent to 4.7 per cent and Singapore 4.4 per cent to 4.8 per cent, respectively. The year 2005 totally depend on the real expectation of oil prices to range from $35 a barrel to $45 a barrel, adding that oil prices could soar to $60 a barrel should worries about unstable economic progress in all around the World. Looking at the world by geographically though brings into clear view, some agricultural based economies will progress better than others. Sri Lanka must improve its own agriculture sector and prioritise the exports, which will help us to be self-sufficient if we are to overcome any drastic consequences in the near future. |
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| Produced by Lake House |
As we all expected in the year 2004, in US elections, Bush won a second
term with an absolute majority and in Russia Putin went ahead and
appointed his new cabinet of ministers and introduced major reforms to the
Russian economy even before winning the elections as his victory was
imminent.
