ADB bullish on Lanka’s growth, downgrades rest of South Asia
Wednesday, 17 July 2013 00:01
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The Asian Development Bank (ADB) has indicated bullishness over Sri Lanka’s growth prospects though it downgraded the rest of the South Asian region overall.
“The Sri Lankan economy is forecast to grow by 6.8% in 2013 on the back of a strong performance in the remaining quarter of the year. Healthy growth in 2013 and acceleration to 7.2% in 2014 will be supported by further monetary easing and improved electricity generation that will power growth in domestic industry,” the ADB said in a supplement released yesterday to its Asian Development Outlook (ADO) 2013.
The forecast on Sri Lanka is the same as those made in ADO, which was originally released in April this year, whilst it is also higher than South Asia’s average of 5.6% for 2013 and 5.7% for 2014.
Nevertheless, the estimate remains below the Government’s projection of 7 or 7.5% GDP growth for 2013.
The ADB’s latest supplement said by contrast (to Sri Lanka), Afghanistan, Bangladesh, Nepal, and Pakistan are expected to report slower growth in 2013 than in 2012, as some of these countries face political transitions that could hamper economic policy making.
It said the South Asia sub region is expected to expand by 5.6% in 2013 (marginally less than the ADO 2013 projection of 5.7%) and pick up momentum to post 6.2% growth in 2014.
South Asia’s largest economy, India, is expected to see growth moderate to 5.8% in 2013 against the earlier projection of 6.0%. While this is higher than the 5.0% posted in 2012, growth remains constrained by supply-side bottlenecks, as reflected in the continued slowdown in fixed capital formation, weakness in the industrial sector and sluggish progress in pushing through badly-needed structural reforms.
However, growth in India is expected to accelerate in 2014 as slower inflation provides some scope for monetary easing that could boost investment and consumption. Growth will be further boosted by pre-election spending and the pickup in US growth will support Indian tech companies and related service sectors.
