Sri Lanka's economy will continue to grow - World Bank

by Dulmin Samarasinghe

Sri Lanka's economy would continue to grow at 7.3 percent this year as it was sustained by infrastructure investments and rebuilding following the end of terrorism, a World Bank report said.

In its twice-a-year 'South Asia Economic Focus", the World Bank forecast that economic growth would rise to 5.8 percent in 2015 from 5.2 percent this year. South Asian countries which include Sri Lanka, Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal and Pakistan have largely recovered from last year's financial turmoil caused by changes in the US Federal Reserve monetary policy.

The Report said it was optimistic about economic prospects in South Asia in 2014 due to growing exports and investment. It emphasized that the risks to growth were becoming more domestic, which includes a vulnerable banking sector.

The region's largest economy, India, would grow by 5.7 percent in fiscal year 2014 from 4.8 percent in the last fiscal year with a competitive exchange rate and many large investment projects going ahead. Pakistan's economic growth could increase to four percent this fiscal year from 3.6 percent in 2013 as its economy benefited from a reduction in electricity blackouts, remittance flows from Pakistani workers abroad, exports and a buoyant services sector.

Nepal was recovering from setbacks in the agricultural sector. Helped by strong remittance flows boosting consumption and the services sector, the economy would grow by 4.5 percent in 2014 from 3.6 percent in 2013.

Economic activities recovered in the second half of 2014 in Bangladesh, driven by exports and domestic demand, following setbacks suffered in the first half due to political uncertainty and turmoil.

A recovery in export growth and increases in public expenditure are likely to help achieve 5.4 percent GDP growth this year.