Economy on track to realise growth potential

With the recovery in the global, the economy and the increasing domestic demand after the end of the war and liberation of the North, the Sri Lankan economy will return to its normal growth potential said the Chief Economist of the Central Bank Dr. Nandalal Weerasinghe.

Dr. Nandalal Weerasinghe

Dr. Weerasinghe was addressing the annual conference of the Association of Accounting Technicians of Sri Lanka (AATSL) in Colombo last week.

He said that the global economy is showing signs of recovery and the domestic economic indicators too are positive. The reserve position of the country is being improved from the worst situation in March this year. Balance of payment position is improving and the financial markets too are on a recovery. Dr.Weerasinghe said that with these positive developments the recovery in the real sector of the economy will commence within next two or three months.

He said that the entrance into open market economy and liberalisation of the current account prior to other South Asian countries provided Sri Lanka with a unique environment of challenges to which it had to adopt very quickly. The financial system of the country was sophisticated with the introduction of IT as well as prudent regulations. The regulators introduced several prudential measures and Sri Lanka is a pioneer in introducing Basel-I and Basel-II Accords. As a result our financial system became robust and resilient to external shocks. We introduced further measures to ensure that financial institutions do not increase their exposure to one sector, thus reducing the systemic risks, Dr. Weerasinghe said.

He said that Sri Lanka felt less primary impacts of the global financial crisis. However, to mitigate any adverse impact on the domestic financial system temporary measures were adopted from October 2008 to April 2009. However, as a result of the decrease in global demand the real sector of the economy was affected, he said. GW