Stable political environment will enable inclusive growth, says Chamber Chief | Sunday Observer

Stable political environment will enable inclusive growth, says Chamber Chief

26 January, 2020
The launch of a website at the AGM.
The launch of a website at the AGM.

The recent policy changes will have a positive impact on the country’s economy, a leading Chamber Head said.

“The year 2020 is a very critical period for Sri Lanka as well as the world economy. Our economy faced many internal and external challenges in the recent past. However, with the policy changes and stable political environment, the country will move towards sustainable and inclusive growth, President National Chamber of Commerce, Asela de Livera told the 61st Annual General Meeting of the Chamber in Colombo last week.

“Continued global policy uncertainty, distortionary trade measures and growth deceleration in the economics of important trading partners are influencing growth in Asia, although the region is still the world’s fastest growing region, contributing more than two-thirds to the global growth, he said.

“As per the recent developments, the Sri Lankan economy is gradually recovering from the severe impact of the Easter Sunday terrorist attacks. The real GDP growth was revised to 2.7 percent in 2019, and it is expected to increase to 3.5 percent in 2020 as tourism and other activities normalise,” he said.

The slowdown in the growth and decline in exports has significantly impacted fiscal revenue. The global economy is quite competitive and every single country has its own problems which they need to focus on. Sri Lanka should be seen as a country in the global economy, utilizing its strategic position to benefit from major global economies without favouring any particular country, he said.

The chief guest, the newly-appointed Central Bank Governor Prof. W.D. Lakshman blamed the country’s liberalisation policy package for the current state of the economy.

“From late 1970s onwards, we were implementing a socio-economic policy model involving an increase in the liberalisation of markets with globalisation. While the policy model generated some good results, my view is that, as a whole, it has produced a series of anti-development tendencies in the economy and policy,” Prof. Lakshman said.

He lamented that the current subpar economic growth and unimpressive private sector credit growth are results of the liberalisation policy package adopted by the successive governments in the country.

Prof. Lakshman, however, acknowledged the arguments, which could be raised in support of the liberalisation agenda.

“Those who supported the policy package would have argued that Sri Lanka came to suffer those adverse results because the recommended policy package of liberalisation wasn’t implemented correctly in full.

They consequently argued that a large part of the liberalisation agenda was unmet,” he added. Prof. Lakshman said that he hopes to support the government to find an alternative socio-economic policy to the liberalization agenda while noting that the country is at crossroads at the moment.

The import substitution effort is important as much as exports, to reach Sri Lanka’s socio-economic objectives.

The CB would continue its current accommodating monetary policy while supporting the government to achieve its growth initiatives, he stressed.