Rapid economic development:

Sri Lanka targets double digit growth

by Shirajiv Sirimane

Foreign economic experts say rapid economic development taking place in Sri Lanka could take the country’s economic growth to a near double digit level. The US-based prestigious Wall Street Journal in its year-end review states that Sri Lanka having ended a 30-year-old conflict is making rapid progress and is expected to record eight percent economic growth this year, up from an average of five percent in the preceding decade.

The journal states that in the 19 months since the conflict ended, stock market prices increased nearly 250 percent and the rupee was up six percent. Government debt is also in high demand. “Bond-market strategists are anticipating Sri Lanka’s credit rating to be revised upward next year,” the WSJ said.

An official of the Central Bank said that the country is on the right economic track to achieve double digit economic growth.

The UK Guardian , also says that Sri Lanka’s economy was expected to grow eight percent in 2010 and nine percent in 2011 - rates which are usually seen in China. “Tourism is booming, with 750,000 visitors anticipated in 2011, while tea exporters are also enjoying strong gains,” the Guardian report said.

Meanwhile, the Economic Times India commended the Colombo Stock Exchange (CSE) for becoming Asia’s best performing Bourse for the second year running.

Asia’s best performer in 2010 surged 96 percent year on year, analysts said. They said the increased investor confidence and optimism after terrorism was eradicated created the stock market boom. The daily average turnover for 2010 was at a record Rs. 2.4 billion, more than four times higher than the previous all-time high of last year’s Rs. 593.6 million. The year saw a net foreign outflow of Rs. 26.4 billion from the Bourse, more than double of last year’s net selling of Rs. 11.4 billion. Analysts said the bourse was trading at a forward price-to-earnings (P/E) ratio of 17.5, the highest among emerging markets, compared with 13.1 of Asian markets and 12.1 of global emerging markets.

Over 65 IPOs (Initial Public Offerings) are due to be launched this year and this too would have a major positive impact on the economy. SriLankan Airlines and Litro Gas are expected to be among the companies that will be listed on the CSE.

Sri Lanka’s rupee has also appreciated following a record inflow of foreign investment, including a US$ 75 million upfront payment for the Shangri La project in Colombo.