Moderate growth this year - ADB

by Lalin FERNANDOPULLE

The Asian Development Bank (ADB) forecast a moderate economic growth rate for Sri Lanka this year in the Asian Development Bank Outllook for 2012 (ADO).

The Bank said that Sri Lanka's economic growth rate will be around seven percent this year and would improve in 2013.

Rising global oil prices and the low external demand triggered by the eurozone debt crisis are major constraints for higher economic growth, the Bank said.

The flagship economic publication of the Bank was launched in Hong Kong on April 11. The Bank's growth forecast for the country this year is lower than the prediction of the Central Bank.

The Central Bank downgraded its economic growth forecast of 8.3 percent to 7.2 percent this year due to unfavourable external factors.

Country Director, ADB Rita O’ Sullivan said that the rising oil prices and the eurozone debt crisis are major constraints to achieve higher economic growth. “Seven percent is a strong growth rate given the slow global economic recovery”, she said.

The underdeveloped infrastructure in Sri Lanka is a major impediment for development, the Outlook stated.

“The ADB is undertaking investments in lagging regions to reduce poverty”,O'Sullivan said.

ADO's strategy 2020 which is in line with the Goverment's development policy framework is focused on developing road infrastructure, sustainable energy, water supply and sanitation, rubber plantation in the North and the East, capital market and knowledge-product sharing.

“The Bank will promote vibrant private public partnerships to enhance investments for regional development,” the country director said.

ADB has funded some of the major infrastructure projects such as the Southern Highway, the Colombo South Habour Expansion project, provincial road development,water supply and sanitation projects in the North and the East.

Senior country Economist ADB, Tadateru Hayashi said that Sri Lanka would have achieved around 8.5 percent growth rate last year if not for regular floods which hampered agricultural growth. The economy grew by 8.3 percent last year.

The ADB's theme chapter which looks at widening inequality noted that in spite of Asia's 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 shared, the report sates.

The report highlights the challenges for countries in the region such as tackling income disparities and reducing pressure on natural resources which threaten the sustainability of growth and poverty reduction.

The Outlook commends Asia's poverty reduction to 28.2 percent compared to other regions. Growth in Asia is expected to ease to a round 6.9 percent this year before picking up to 7.3 percent next year.