South Asia to the fore
At the annual spring meeting of the IMF and World Bank held recently,
the global economy was discussed. One of the key outcomes of the
discussion was the reckoning of South Asia among the fastest growing
economies of the world. The fact that South Asia is also the home to
many living in abject poverty is another issue to be reckoned with.
India achieving double digit growth was also not far away.
Meanwhile, South Asia's Chief Economist, Kalpana Kochhar who was in
Sri Lanka recently discussed the challenges and opportunities of the
region's future. Sri Lanka made a remarkable recovery in the North and
the East to record an 8 percent growth.
This was facilitated with the revival of agriculture in the fertile
northern and eastern provinces. The eastern province is well-known for
its rich paddy harvest and was known as the 'Bread Basket' of Sri Lanka.
These ventures resulted in a steep decrease in the prices of vegetables
Unfortunately, growth for 2012 fell below the expected 8 percent
range. South Asia will be hard- pressed to meet the vast challenges to
meet development goals. It has been reported that only a few companies
in the region have sustained high growth rates for sustainable periods.
In the backdrop of escalating costs of imported milk powder, the
Government is promoting the dairy industry.
It has also called upon Banks to provide adequate credit facilities
to milk producers with less emphasis on financing the import of milk
It was quite recently that some milk producers threw away their milk
collection that was not purchased by multinational companies who own
milk powder processing plants.
These episodes no doubt reflect the reality and potential of Sri
Lanka as an emerging economy, despite recent setbacks in macroeconomic
In the region, Sri Lanka yet seems an attractive, peaceful
destination for tourism and investment with a well-developed road
network, skilled workforce, and landscaped cities together with leisure
The east coast with its beautiful beaches has been a major
Another positive factor is the political stability that has enabled
many bold measures to be adopted.
According to the first quarter Central Bank release, the trade
balance indicated $ 2.5b in comparison to $ 1.7b in 2011.
The Government's initiative to curtail credit and imports seem to be
paying off with gross official reserves of $ 6.9m equivalent to three
On the positive side, global oil production is reported to have
raised due to higher output from OPEC and North American producers.
This seems good news for Sri Lanka, which spends heavily on the
import of fuel that is used mostly for energy and transportat with
nominal consumption on lighting with nearly 93 percent of lighting being
met by the supply of electricity.
One of the major drawbacks on the local fuel supply sector is the
limitation of the capacity of the oil refinery that was established in
1969. Because of the unprecedented economic growth, demand for fuel
supply increased dramatically.
Economists who met at the spring meeting, were unanimous that China
and India are major drivers of growth and this environment should be
ideal for countries such as Sri Lanka who live in this powerful