Lanka should woo Asian markets – Koshy Mathai

By Lalin FERNANDOPULLE

Sri Lanka could be affected by the Erozone crisis as the country has a substantial export exposure to Europe said IMF Resident Mission Head Dr. Koshy Mathai.

“That's why we think the Central Bank's commitment to maintain and even build reserves, as well as keeping the exchange rate flexible is so important and commendable”, he said.

The global economy will grow more slowly over the next two years, according to the IMF’s latest forecast. The IMF has warned that Europe’s financial crisis and a potential budget crisis in the United States could slow world growth even further.

The IMF also cut its forecast for global growth to 3.9 percent in 2013, from 4.1percent three months ago.

Dr. Mathai said that it would be important for Sri Lanka to develop export markets in the Asian region, both to diversify against shocks coming from any one part of the world and to take advantage of the fast growth in many of Sri Lanka's neighbours. Europe is a major market for Sri Lankan apparels, gem and jewellery and ceramics.

Trade data revealed that Sri Lanka's exports to Europe have increased despite the recession, but according to experts its markets could be threatened by competing export countries which have easy access to the region.

Sri Lanka exported $3.6 b worth of goods to Europe last year. UK, Italy, Germany, Belgium and France are the top importers of Sri Lankan goods.