The growth in the Indian economy will help Sri Lanka’s economic growth, Deputy Central Bank Governor Dr. Nandalal Weerasinghe said.
“Sri Lanka has a very high educated population, geographical advantage physical infrastructure, easy to do business, low tax regime and political stability adding further impetus to growth in the Asian region especially in India and China,” Dr. Weerasinghe told at a seminar organized by the Ceylon Chamber of Commerce (CCC) yesterday.
The theme of the seminar was on “Post War and Post Election: Is Sri Lankan Economy Ready to make the much needed break”.
He said in the last couple of years, the Indian economy has shown growth with its current stable political situation and is likely to beat even China in the coming years Dr. Weerasinghe said Sri Lanka has failed to attract large long term foreign direct investments to an expected level despite its advantageous position because it lacks the right technology, lack of transparency and a level playing field.
“If we have good governance, transparency and other incentives many large long term foreign direct investment companies will invest here because Sri Lanka has access to huge markets in India and also prospective FTAs with other countries like China,”he said.
The Deputy Governor said that Sri Lanka has a huge formal and informal SME sector and the government should do every possible assistance to infuse new technology, skilled work force and capacity building in those sectors.
“Sri Lanka may not be able to show a 6.0 percent growth rate under the newly revised method of estimating gross domestic product,”he said.
Sri Lanka has published revised GDP measurements under a 2010 base year, compared to the earlier 2002, which has captured a number of new economic activities which were not counted under the earlier system.
As a result the total output of GDP has been revised up, making the base bigger.
“It will be a challenge to reach 6.0 percent growth this year, with the new base,” Weerasinghe said.
Sri Lanka is forecasting 7.2 percent growth under the old method of estimating GDP. GDP was also lower in 2013 and 2014 under the new system, Weerasinghe said Re-basing the GDP is a technical exercise that was started in 2011 with the advice of the International Monetary Fund and experts. It is a mistake to directly compare the two rates of growth, he said.
He said inflation was expected to be maintained at low rates which will allow historically low interest rates to continue.
Courtesy: Daily News 21 July 2015