Indicator of strong economy:

Lanka moves up on Global Competitiveness Report

By Shirajiv SIRIMANE

Governor Central Bank Ajith Nivaard Cabral said that Sri Lanka has got its fundamentals right and is fast moving towards becoming the Wonder of Asia.

He said that while other global leaders are facing economic problems, Sri Lanka is reporting a strong economy and the main reason for this was political stability and taking prudent financial measures in advance to insulate the country against global shocks. At a time America is borrowing money from India and the Bank of Ceylon is lending to the Maldives, Sri Lanka's economy is surging ahead.

Last week, the country gained another accolade as Sri Lanka continued its rise up the Global Competitiveness Index(GCI)jumping 10 places in the 2011-12 World Economic Forum Report.

The World Economic Forum (WFF) last week released its latest Global Competitiveness Report (GCR) (2011-2012), which indicates that Sri Lanka jumped an impressive 10 places in the rankings, to 52 from 62 in the 2010-2011 report. This is a further improvement from the 2009-2010 report which ranked the country at 79th position.

Thierry Geiger, Associate Director of the WEF's Centre for Global Competitiveness and Performance said, "Sri Lanka has made a remarkable performance. When I look at the evolution across all indicators, Sri Lanka shows improvements on 80 percent of them - 80-90 of the 110 indicators - both in terms of scores as well as rank."

"Last year was a big jump. But you need to be cautious of ranks. So many countries are ranked so close to each other. It's important to focus on the scores. In the last GCR, Sri Lanka improved its score by 0.24 points which we consider a big jump. "This year the score improvement was not as big as last year, but there is consistency" he said.

Sri Lanka made the greatest improvements in scores, year-on-year, in the pillars of 'macro-economic stability' (up by 0.48 points) and 'infrastructure' (up by 0.33 points). Meanwhile, the most noteworthy decline in scores was in 'labour market efficiency' (down by 0.11 points).

Asia's rise to economic prominence has been accompanied by a remarkable dynamism in terms of competitiveness.

Over the past five years, several countries in the region including China, Indonesia, Vietnam, and Sri Lanka have made important strides in the GCI rankings. Yet, disparities in terms of competitiveness within the region are unique, ranging from Singapore at second place to Timor-Leste at 131st.

Two of the region's largest economies, Bangladesh (108th) and Pakistan (118th), continue to rank very low, while a number of Asian emerging economies enter the top 30.

Comparisons

Sri Lanka scored better than India (91st) this year too, but the WEF economist cautioned against comparing the two. "You must keep in mind that improvements in smaller economies are easier to make". However, he added that even among the 'developing Asia' country group, and even among smaller economies, Sri Lanka does well. The selected cross-country benchmarking shows that the country still lags behind South East Asian neighbours such as Malaysia, Thailand, and Indonesia, and clearly has some way to go to become competitive on par with these dynamic economies.

Switzerland tops the overall rankings of the GCR, while Singapore overtakes Sweden for second position. Northern and Western European countries dominate the top 10 with Sweden (third), Finland (fourth), Germany (sixth), the Netherlands (seventh), Denmark (eighth) and the United Kingdom (10th). Japan remains the second-ranked Asian economy at ninth place, despite falling three places since last year.

The United States continues its decline for the third year in a row, falling one more place to fifth position.

Economist Rohantha Athukorale said that given that Sri Lanka has jumped 10 places from 62 last year, to become 52 in the 2011-2012 in the Global Competitiveness Index, "we now must become a top 30 country".

Next economic engine

Athukorale who sits on many boards of directorates in the public, private and international public sector in Sri Lanka and overseas, pointed out that for a country to move up from 79 two years ago to become closer to the top fifty is an achievement that sure cuts a clear positioning globally as the next economic engine of the world that can be a 100 billion dollars in the near future.

However, he cautioned that we must focus on the areas that have not developed in line with the needs of the changing world.

One of them was labour market efficiency where Sri Lanka is ranked a low of 117 on a base of 142 countries. On technological readiness too there has been no improvement with a rank of 85 in the last three years.

The speaker assigned this responsibility to the technological industry of Sri Lanka and requested some deliberation by the specialists who were gathered there.

A key point highlighted by Athukorale was that whilst Sri Lanka forges ahead in the competitiveness arena globally, businesses must drive cutting edge innovation stronger, given that the county's ranking has been hovering around 42 during the last three years even though on 'business sophistication', we had made giant strides.

But the speaker emphasised that given his experience of working in top global companies in the South Asian region, the unique culture of Sri Lanka must be preserved at any cost. Sri Lanka's hospitality culture combined with family centred orientation must be preserved so that Sri Lanka will be uniquely positioned globally.

He also highlighted the government drive of improving the Small and Medium Enterprises (SME) sector with the Divi Neguma program as the SMEs of Sri Lanka are the backbone of the economy with a major contribution. "We must now connect the world to the SMEs of Sri Lanka so that the peace dividend is felt outside the Western Province.

This will further give stability to Sri Lanka," said Athukorale.