SL to grow slowest among key South Asian nations

Sri Lanka, once a high-flyer at least in terms of GDP growth within South Asia, will have to settle for being the slowest in the region in the next five years.

As per the latest World Bank forecast released yesterday, Sri Lanka will be growing at the lowest rate at least among key countries in South Asia.

The estimated 4.6% growth for this year is only higher than that of Afghanistan with others’ growth ranging from a region wide highest of 7.2% by Bangladesh and 7% by India and Pakistan’s 5.3%. Smaller nations such as Nepal are tipped to grow by 7.5% and Bhutan by 6.7% and the politically troubled Maldives by 4.8%.

Next year Sri Lanka’s growth is estimated at 5% slightly above Maldives and Nepal but lower in comparison to 7.3% by India, 6.4% by Bangladesh and 5.5% by Pakistan. The forecast for 2019 for Sri Lanka is 5.1% but there is much higher growth for India, Bangladesh and Pakistan.

In releasing the latest forecast via the twice-a-year South Asian Economic Focus, the World Bank said the region has lost the growth lead but can regain it through action. South Asian countries should address growth constraints with policies and reforms, it added.

After leading global growth for two years, South Asia has fallen to second place, after East Asia and the Pacific, due to temporary shocks and longer-term challenges slowing down growth. The World Bank said regional economic growth is expected to slow to 6.9% in 2017 from 7.5% in 2016, but growth could rebound to 7.1% in 2018 with the right mix of policies and reforms.  

“While growth rates in South Asia largely remain robust given the economic shocks that some countries in the region have faced, countries should continue to actively address their growing trade and fiscal deficits,” said Annette Dixon, the World Bank South Asia Region Vice President. “With the right mix of policies to respond to challenges, we remain confident that South Asian countries can accelerate their growth to create more opportunities and prosperity for their people.” 

The report also highlights that South Asia was once at the cutting edge in economic measurement and analysis pioneering techniques such as the use of household surveys. The region shows potential to regain this crown through adopting big data technologies such as night-time satellite imagery data to improve measurements and the understanding of economic activity. 

“We’re very excited about the potential of adopting new sources of data to improve our understanding of economic activity. Night-light data, for instance is easy to obtain, regularly updated and highly accurate,” said World Bank South Asia Region Chief Economist Martin Rama. 

“In this report, it allows us to compare with other sources of data and increases our understanding of how policies and shocks may impact economic activity, down to the local level. This advancement has a bright and exciting future ahead.”

Specifically on Sri Lanka, the World Bank said the economy is projected to grow by 4.6% in 2017 and marginally exceed 5.0% in the medium-term, driven by private consumption and investment. 

Inflation will remain at mid-single digits, supported by low international commodity prices. The external sector is poised to benefit from the reinstatement of GSP+ preferential access to the European Union and rapidly growing tourism, although the drought could adversely impact exports and increase petroleum imports. 

The deceleration of previously stable remittances flow will also be a strain on the external sector. Nevertheless, external buffers are projected to improve, with emphasis placed on purchasing foreign exchange, maintaining a more market-determined exchange rate and the sale or leasing of select government assets, including the Hambantota seaport. Supported by a small primary balance, the overall fiscal deficit will fall to 5.2% in GDP for 2017, thanks mainly to the implementation of revenue measures.

SL to grow slowest among key South Asian nations 

Sri Lanka, once a high-flyer at least in terms of GDP growth within South Asia, will have to settle for being the slowest in the region in the next five years.

As per the latest World Bank forecast released yesterday, Sri Lanka will be growing at the lowest rate at least among key countries in South Asia.

The estimated 4.6% growth for this year is only higher than that of Afghanistan with others’ growth ranging from a region wide highest of 7.2% by Bangladesh and 7% by India and Pakistan’s 5.3%. Smaller nations such as Nepal are tipped to grow by 7.5% and Bhutan by 6.7% and the politically troubled Maldives by 4.8%.

Next year Sri Lanka’s growth is estimated at 5% slightly above Maldives and Nepal but lower in comparison to 7.3% by India, 6.4% by Bangladesh and 5.5% by Pakistan. The forecast for 2019 for Sri Lanka is 5.1% but there is much higher growth for India, Bangladesh and Pakistan.

In releasing the latest forecast via the twice-a-year South Asian Economic Focus, the World Bank said the region has lost the growth lead but can regain it through action. South Asian countries should address growth constraints with policies and reforms, it added.

After leading global growth for two years, South Asia has fallen to second place, after East Asia and the Pacific, due to temporary shocks and longer-term challenges slowing down growth. The World Bank said regional economic growth is expected to slow to 6.9% in 2017 from 7.5% in 2016, but growth could rebound to 7.1% in 2018 with the right mix of policies and reforms.  

“While growth rates in South Asia largely remain robust given the economic shocks that some countries in the region have faced, countries should continue to actively address their growing trade and fiscal deficits,” said Annette Dixon, the World Bank South Asia Region Vice President. “With the right mix of policies to respond to challenges, we remain confident that South Asian countries can accelerate their growth to create more opportunities and prosperity for their people.” 

The report also highlights that South Asia was once at the cutting edge in economic measurement and analysis pioneering techniques such as the use of household surveys. The region shows potential to regain this crown through adopting big data technologies such as night-time satellite imagery data to improve measurements and the understanding of economic activity. 

“We’re very excited about the potential of adopting new sources of data to improve our understanding of economic activity. Night-light data, for instance is easy to obtain, regularly updated and highly accurate,” said World Bank South Asia Region Chief Economist Martin Rama. 

“In this report, it allows us to compare with other sources of data and increases our understanding of how policies and shocks may impact economic activity, down to the local level. This advancement has a bright and exciting future ahead.”

Specifically on Sri Lanka, the World Bank said the economy is projected to grow by 4.6% in 2017 and marginally exceed 5.0% in the medium-term, driven by private consumption and investment. 

Inflation will remain at mid-single digits, supported by low international commodity prices. The external sector is poised to benefit from the reinstatement of GSP+ preferential access to the European Union and rapidly growing tourism, although the drought could adversely impact exports and increase petroleum imports. 

The deceleration of previously stable remittances flow will also be a strain on the external sector. Nevertheless, external buffers are projected to improve, with emphasis placed on purchasing foreign exchange, maintaining a more market-determined exchange rate and the sale or leasing of select government assets, including the Hambantota seaport. Supported by a small primary balance, the overall fiscal deficit will fall to 5.2% in GDP for 2017, thanks mainly to the implementation of revenue measures.