India-Pakistan stand-off: 

Economists say no immediate effect on Lanka

By Anurangi Singh

Sri Lanka will not suffer grave economic downfall owing to the tense situation between India and Pakistan, economists predict. However, there may be a trickle down impact on the country if the situation continues and will be a setback to the government’s efforts to revive trade within the region.

“Whether this will be something more than a short-term situation or not remains to be seen. If the issue continues the whole geo-political uncertainty will prolong and that could have an impact on South Asian countries in terms of not only trade but also the way portfolio investors view the region,” Lead Economist, Frontier Research, Shiran Fernando told the Sunday Observer.

Considering the region as a whole, it doesn’t trade as much as it should, and the key reason is the India-Pakistan issue.

“Sri Lanka’s hopes of reviving trade within the region may face a setback due to this. But as trading within the region is not optimal, it won’t be major,” Fernando said. International relations Sri Lanka has maintained with the two countries have been very independent and moderate, says Head, Department of International Relations at the Colombo University, Dr. Maneesha Pasqual.

“Sri Lanka has always been able to balance issues between India and Pakistan because we’ve had close relationships in terms of proximity and in terms of economic and cultural relationships with India whereas our relationship with Pakistan is more on military-defence ties. But SL can and always acted as a mediator between these two countries. This has been our role historically and we can offer it as part of our foreign policy to prevent it from escalating, and if it has escalated to tone it down a little,” he said.

The indefinite postponement of the of South Asian Association for Regional Cooperation (SAARC) is not good for the Organisation as this is the third time the conference has been postponed.

“In terms of SAARC this is a disappointment as this shouldn’t have been the case. Although the postponement was inevitable this is the third time the SAARC summit has been postponed in the 30 year history of this organization and it doesn’t look good for the organization, a this should be the venue for discussions amongst the countries in the region and not something to be pushed aside,” Dr. Pasqual said.