Drop in exports source of worry for SL economy, economist says
View(s):Sri Lanka exports dropped to 17 per cent of GDP last year from a high of 32 per cent of GDP in 2000, according to economist and former Commonwealth Secretariat director Dr. Indrajit Coomaraswamy.
Speaking as the guest speaker at the AGM of the British Scholars Association in Colombo last week, he said these facts were a worrying concern for the island’s economy. “Moreover foreign policy formulators (here) should understand that 54 per cent of the island exports are to the North Europe and North America but under 10 per cent to India, China and Japan and much lesser than 10 per cent to ASEAN. We export hardly anything to Africa,” he said.
In the current century termed as ‘Asia’s growth century’, Sri Lanka’s export strategy has to be reviewed,” he said in comments released in a media statement issued by the association.
Sri Lanka, he said, should look at China. Despite no free trade agreements, freight taxes and many political differences, China’s exports have grown from US$1.5 billion in 2000 to $50 billion last year. Similarly exports from Singapore and Malaysia to India too were growing. Despite having a free trade agreement, Sri Lanka’s exports to India doesn’t show a satisfactory growth.
He said Sri Lanka needs to achieve five goals if its wishes to achieve a sustained 8 per cent growth for the next 10 years and they are;
1. Unwavering strategic development plan for 10 -15 years where economy takes precedence over politics.
2. Get country’s macroeconomics right
3. Improve productivity and improve the technical system
4. Reform the education and improve professional skills
5. Enhancing exports
“With an incremental capital output ratio of 4.5 per cent Sri Lanka needs to uplift current investment ratio to 35 per cent from the present 30 per cent if the country to achieve 8 per cent growth rate. Some 32 per cent of the labour force in Sri Lanka is employed in agriculture but only produces 11 per cent in GDP terms to the country’s economy. In contrast Thailand’s productivity is double that of Sri Lanka,” he was quoted as saying.
The other unproductive segment in Sri Lanka is the public sector. The number of those employed in public sector has ballooned from 600,000 in 2007 to 1.3 million at the end of last year resulting in extra taxes and the budget deficit increasing. The huge budget deficit is the cancer on the macro economy, he noted. “Sri Lanka is living beyond her means and this causes inflation because of the need to pump in money to bridge the day to day deficit. This also leads to high interest rates in order to beat inflation and the solution was to depreciate at the exchange rate, adding further inflationary pressure on the economy but inflation has a negative impact on Sri Lanka’s export competitiveness,” he said.
Dr. Coomaraswamy said pruning budget deficit may be politically painful and will entail cuts in subsidies. State sector employment and high government expenditure situation is made worst due to a fall in revenue and a significant portion of the budget deficit borne by state banks depriving lending to the commercial sector.
| New presidentRavindra Fernando, Senior Professor of Forensic Medicine and Toxicology of the Faculty of Medicine, University of Colombo was unanimously elected as the President of the British Scholars’ Association of Sri Lanka.
He holds MBBS, MD and DMJ degrees and is a Fellow of the Ceylon College of Physicians, College of General Practitioners of Sri Lanka, Royal College of Physicians (of London, Glasgow and Edinburgh) and the Royal College of Pathologists of UK. Prof. Fernando was the Director of the Centre for the Studies of Human Rights of the Faculty of Law of the University of Colombo and has served as the Chairman of the National Dangerous Drugs Control Board. Dr. Kamakshi Mubarak was elected as the secretary. |
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