Disruption not significant, if contained by November - CB Governor | Daily News

Disruption not significant, if contained by November - CB Governor

Central Bank Governor Dr. Indrajit Coomaraswamy said if the country has clear stability by November and is able put the past behind, the disruption may not be significant.

Speaking to the CNBC channel on April 26, Coomaraswamy was of the view that it was too early to forecast the impact on the economy of the Easter attacks.

The Central Bank Governor said there is a seasonality attached to the tourism sector when it comes to arrivals. “The peak season is November through March. May to June tend to be fairly down months relatively speaking. The fact that we are going through the off season will help mitigate the effects. It depends on how quickly we are able to stabilise the situation,” he said.

Coomaraswamy said if one is able to bring normalcy and also to give confidence to the people and businesses that the situation is under control, then it is possible that the impact can be contained.” He said that data from previous incidences of violence had a negative impact only on the following tourist season.

Responding to a question on the downside risks to the growth forecast Coomaraswamy said: “Tourism is roughly about five percent of GDP.” He also explained that the low base effects of last year combined with the buoyant IT and industrial exports placed the country favorably on growth trajectories.

The Governor added “in an inflation targeting framework the exchange rate is the first line of defence.”

“It has to be flexible. We will manage the exchange rate flexibly. We will intervene if there is a disorderly adjustment. In the last couple of days, we intervened a little in the market due to the shock that has come out of the blue.The exchange rate should not move in a way that is misaligned with the underlying fundamentals.”


 

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