A senior university don in economics last week blasted the statistical jargon of arriving at the inflation rates and GDP per capita indicating that the base of calculation is not realistic.
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| Central Bank Governor Ajith Nivard Cabraal speaking at the event |
Nandasiri Keembiyahetti, Senior Lecturer in Economics, Ruhuna University, one of the participants at the Conference for University Lecturers organized by the Central Bank (CB) in Colombo, during question time commented that GDP capital growth is a combination of real GDP growth, inflation rate, population growth and also exchange rate and if Sri Lanka had doubled this GDP from 2004 to 2008 – within four years it would be a remarkable achievement.
He said that his concern is that ‘to double GDP within four years while real GDP growth was 6.4 % there should be an over 12% increase in price levels even if the other levels were unchanged’.
He said; “But we know the population growth increase and also Sri Lankan rupee depreciation against US currency. Therefore, price increases during this period should have been 12%. But the government and parties related to government tried to interpret this as real achievement which is wrong. The reality is that we achieved 6.5% real growth while the annual average was around 13%. Therefore, the biggest contribution for doubling GDP per capita came from the increase in the price levels and not from the real economic growth”.
Mr Keembiyahetti also expressed that it would not be fair to compare the Sri Lankan scenario of inflation and GDP per capita to countries like Thailand, Malaysia and Singapore and said that other countries and the three countries mentioned developed doubling the per capita GDP(PCGDP) not because most of the contribution came from inflation, but because contribution from the GDP was in real terms.
He said that if Sri Lanka hopes to double the GDP per capita in 2016 as the government has predicted, the country’s growth rate must be over 10% which is not just achievable at the current rate of 8%.
The full day conference saw resource persons, mostly from the Central Bank, ‘educating’ university academia on the financial structure and the financial situation of the country.
The sessions were assigned to different areas. First session – Economic and Price Stability; 2nd –Currency Management; 3rd – Financial System Stability; 4th – Agency Function of the CBSL. K.D.Ranasinghe, Chief Economist/Director, CB speaking on ‘Achieving the target of US$ 4,000 per capita income by 2016’ said that measuring per capita GDP is calculated by dividing the GDP at current market prices by the estimated mid-year population of the country and expressed in US dollars and said that in 1960, PCGDP in Sri Lanka was estimated at US$140 while by 2010, it has increased to US$2,399.
He said that the growth potential has increased with the end of the three decades-long conflict across all sectors. He elaborated the potential of agriculture, domestic food production, potential in industry, export earnings from garment industry and services sector, harnessing tourism, improving education and skills development, Information Technology, and exploiting geographical location to attract shipping.
Basing lot of statistical data in the elaboration of the above, he said the target of US$4,000 mark by 2016 is achievable.
Dr Ranee Jayamaha, Presidential Advisor speaking on ‘Development and Operationalizing the five Hubs – Naval, Aviation, Commercial, Energy and Knowledge’ detailed how they could be achieved. In the case of Knowledge by 2015 - IT literacy rate to reach 75%; Internet Broadband access to reach 60%; Knowledge-based jobs to reach 80,000; Export earnings to reach US$ 1 billion.
In aviation she said that there would be a second airport in Mattala, an upgrade of domestic airports and link up with international airlines and the geographic location would also be exploited. She compared with other countries and said that development of aviation would greatly contribute to the economic growth of the country and facilitate tourism industry development. She said that ancillary services and industries would be developed and hosting international events would also be promoted. Ajith Nivard Cabraal, CB Governor made the inaugural address. |
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