SL may maintain 4% growth - Prof. Samarakoon | Sunday Observer

SL may maintain 4% growth - Prof. Samarakoon

Sri Lanka faces no difficulty in debt financing as there is a good base of debt provision to repay external debts of the country, National Economic Council (NEC) Secretary General and Chief Economist Prof. Lalith Samarakoon, told a Conference on Economic Challenges of Sri Lanka in 2019 in Colombo on Friday.

Briefing the global economic prospects and behaviour in the coming years, Prof. Samarakoon said Sri Lanka’s Stock market would confront more challenges as the United States Federal Bank will increase US interest rates this month and at least three more spells next year.

“The US is becoming a more attractive market for investors. They will move their investments from emerging or frontier markets to the US. This is a challenge financial markets such as Sri Lanka will have to deal next year,” Prof. Samarakoon said. Explaining the slowing down of the global economy next year, he said, “USA, China and EU expect a lower economic growth next year. The trade war between the USA and China may affect the economies of both countries adversely: a drop of GDP in the USA and China by 0.9 percent and 1.6 percent.”

According to Prof. Samarakoon, the uncertainty in the Euro zone will increase, with a probable unorganised Brexit and a collapse in the Italian Economy.

“A failure to balance the consequence of Brexit may cause a 5 - 10 percent drop in the UK’s GDP. As Italy is failing to meet the EU demand of 60 percent public debt against its GDP, the European Union has warned Italy of taking strict action, which may affect to the EU region.”

Prof. Samarakoon said Sri Lanka may maintain a four percent economic growth during next few years amidst adverse global economic shocks. Central Bank Deputy Governor Dr. Nandalal Weerasinghe said the bank aims at six percent economic growth and five percent inflation.

“The inflation rate of the country had been around 12 percent historically, but the Central Bank reduced the rate to nearly four percent in recent years. However, according to our mid-term plan, the country needs at least eight percent GDP growth annually,” he said.