Sri Lanka’s post-war economic recovery is greatly appreciated by the World Bank in its Global Economic Prospects report (June 2011), which is released today and said that the India and Sri Lanka will lead the South Asian growth path—reaching 7.9 percent in 2013.
“Real Gross Domestic Product (GDP) growth in Sri Lanka remains buoyant, GDP growth in 2010 (calendar year) registered 8 percent and has been strongly underpinned by the peace dividend following the end of the decades-old civil war”, the report said.
According to World Bank this recovery was led by private consumption and investment.
Agricultural output growth was boosted by the return to production of previously fallowed land with the cessation of fighting, while services activity benefitted from an upsurge in tourism, it stated.
Meanwhile ,the report said that the Sri Lanka’s economic Activities in the first few months of 2011 has slowed due to waning of these rebound effects from the end-of-conflict and more normal growth rates in agriculture (aside from the negative impact of floods).
Sri Lanka has posted a 46 percent upsurge in tourist arrivals following the end of civil war in 2009 and the countries policymakers are banking on tourism to be one of the lead sectors to push economic growth after the end of a 30-year war. The Island nation targeting 2.5 million tourists in the year 2016 as per its strategic tourism plan.
The pick-up in the dollar value of remittances was strongest in Sri Lanka, where they increased 24 percent in 2010—reflecting increased inflows through official channels and the boost in confidence following the end of the civil war, the World Bank said.
Following the end of the civil war in Sri Lanka of 2009 capital inflows have surged, contributing to the Colombo Stock Exchange’s boom returns of 96 percent in dollar terms in 2010, registering the largest gains in the world in the year.
Additionally, large programmed investment and reconstruction projects in Afghanistan, Bangladesh, Bhutan, India and Sri Lanka should support acceleration of GDP growth in the outer years, boosting productivity and potential output, it also mentioned.
Sri Lanka has raised 2.1 billion US dollars to rebuild the infrastructure facilities in war torn northern region in 2010.
According to report, the region’s relatively strong projected growth path—reaching 7.9 percent in 2013 compared with the 6.0 percent average from 1998 through 2007 (compound growth rate)—is projected to be led by India, Sri Lanka and Bangladesh, where acceleration of investment activity is expected to support higher growth outturns. In contrast, Pakistan and Nepal are expected to lag, given continued political challenges and associated macro-policy slippage.
The World Bank projects that as developing countries reach full capacity, growth will slow from 7.3 percent in 2010 to around 6.3 percent each year from 2011-2013.
High-income countries will see growth slow from 2.7 percent in 2010 to 2.2 percent in 2011 before picking up to 2.7 percent and 2.6 percent in 2012 and 2013 respectively.
“Globally, GDP is expected to grow 3.2 percent in 2011 before edging up to 3.6 percent in 2012,” said Justin Yifu Lin, the World Bank’s Chief Economist and Senior Vice President for Development Economics.
“But further increases in already high oil and food prices could significantly curb economic growth and hurt the poor.” he said.
As they put the financial crisis behind them, developing countries need to focus on tackling country-specific challenges such as achieving balanced growth through structural reforms, coping with inflationary pressures, and dealing with high commodity prices, the World Bank says in its June 2011 edition of Global Economic Prospects.
In contrast, prospects for high-income countries and many of Europe’s developing countries remain clouded by crisis-related problems such as high unemployment, household and banking-sector budget consolidation, and concerns over fiscal sustainability among other factors, the report further stated.
– Asian Tribune –