ADB forecasts 8% GDP growth
Sri Lanka has made great progress compared to many South Asian
countries which are lagging in economic growth, said Chief Economist of
the Asian Development Bank (ADB), Dr. Narhari Rao at the launch of Asian
Development Outlook (ADO) 2011 on Wednesday.
Rao said that Sri Lanka has already achieved much compared to many
countries in the region and added that the country is poised for growth
in the next two years.
ADO, the annual flagship publication of ADB forecasts Sri Lanka’s GDP
growth rate to be around eight percent this year following a strong
rebound last year which recorded a 7.6 percent growth rate.
“We are optimistic that Sri Lanka will achieve an economic growth
rate of around eight percent in the next two years”, Rao said.
The ADO stated that Sri Lanka could reach eight percent growth
provided policy makers focus on fiscal consolidation, reforms to the two
State sector energy enterprises, finance sector reforms and maintain a
flexible exchange rate.
Sri Lanka’s economic growth rate has been around six to seven percent
since 2006 except for a slump in 2009 due to the intensity of the
conflict and the global financial crisis.
According to ADO, Sri Lanka’s economic growth rate is expected to
surpass Pakistan, Nepal, Maldives and Bangladesh this year as well as
The ADO stated that services and industry will lead growth in 2011.
Agriculture is likely to be affected by heavy rains that lashed early
Rise in global food and fuel prices triggered by uncertainty in the
Middle East and the earthquake in Japan will stoke inflation in emerging
economies. Sri Lanka’s annual average inflation rose to six percent
early this year from 5.9 percent end last year.
The inflation rate is expected to further rise this year due to the
increase in world oil prices. The ADO noted that Sri Lanka’s capital
market remains under developed and that steps need to be taken to
develop infrastructure for the market.
“Sri Lanka should create a market for corporate bonds for which it
should have good rating agencies, auditors and high transparency”, Rao
Economist ADB, Hasitha Wickremesinghe said that.
A good business environment is important to attract investors and
The World Bank’s Doing Business ranks Sri Lanka at 102 out of 183
countries, stressing the need to eliminate red tape.
Asia’s recovery is firm and would continue to expand over the next
two years even though high inflation and the need to develop new
resources present looming challenges to policy-marker.
Country Director ADB Richard Vokes said Asia is leading global
recovery and it needs to be less reliant on industrialised countries and
added that developing Asia should tackle inflation.
Developing Asia is home to two-thirds of the world’s poor and it is
they who are most vulnerable to price increases.
Policy-makers must consider preemptive action to curb inflation, the
ADO stated.Asia’s growth is driven by the two giants, China and India
whose economies are expected to record a growth rate of 9.6 percent and
8.2 percent this year.
Vokes said developing Asia should build strong links with non
traditional markets to maintain growth and make it inclusive. “Building
South-South links is essential to enhance trade and investment in Asia”,