Strong GDP growth in 2007

Nadira Gunatilleke

COLOMBO: Sri Lanka's Gross Domestic Product (GDP) growth in 2007 remained strong despite high International oil prices and an unsettled security situation. Sri Lanka's GDP is estimated to have grown by 6.7 per cent in 2007, and is likely to remain about seven per cent in 2008, the Economic and Social Survey of Asia and the Pacific 2008 said.

The Economic and Social Survey of Asia and the Pacific: Sustaining Growth and Sharing Prosperity, the annual flagship publication of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) was launched at the Sri Lanka Foundation Institute, Colombo 7.

It said Sri Lanka's industrial and services sectors expanded by over seven per cent. According to the survey, Sri Lanka's GDP growth is likely to remain about seven per cent this year with productivity improvements in all three sectors of its economy. Several large planned infrastructure projects are expected to boost aggregate demand and output if speedily implemented.

The statistics also show that Sri Lanka's budget deficit came down from 8.1 per cent in 2006 to 7.2 per cent in 2007.

Sri Lanka's trade outlook received a boost in 2007 as export earnings rose by 10 per cent and import earnings by 8.9 per cent resulting in a narrowing of the trade account.

Is also states that foreign direct investment and financial flows to the Government also increased substantially allowing for a surplus in the overall balance of payments.

Workers remittances had increased significantly and helped to contain the current account deficit estimated to fall to 4.3 per cent of GDP in 2007 from 4.7 per cent in 2006. Delivering a lecture ESCAP Economic Affairs Officer of the, Dr. Muhammad Hussain Malik said it is not only Sri Lanka that experiences high inflation but many countries in the region experience high inflation.

Sri Lanka's unemployment rate is declining and it is 5.5 per cent to six per cent now. Sri Lanka's public debts also on a declining path. "One news headline stated that 'Sri Lanka is getting poorer' but according to this survey, it is not true," he added.

The Survey 2008 looks at trends in the regional economy in 2007 and explores critical short and long term development issues relevant to all developing countries in the region. The survey also spells out that having enjoyed the fastest growth in a decade in 2007, developing economics in the region are expected to grow at a slightly lower, but still robust rate of 7.7 per cent in 2008.

The main short term challenge to economic prospects comes from the still unravelling sub-prime crisis of the US and its possible impact on the world economy.

Institute of Policy Studies Executive Director, Dr.Saman Kelegama and Dr.Nimal Sanderatne of the Post Graduate Institute of Agriculture, University of Peradeniya also spoke.