Sep 24, 2014 (LBO) â€“ Sri Lanka Industrial association says despite conducive interest rates and stable inflation, the weakening of the islands â€˜private sector credit growth is not healthy to achieve economic targets.
Speaking further Jayasinghe said it is needed to have a sound and clear industrial policy frame work to increase the industry sector contribution to the gross domestic product (GDP) .The Industry sector is second largest contributor to GDP at 31 percent and has grown by 9.9 percent in 2013.
â€œMost of our members represent the factory Industry sub sector that is the largest contributor to the manufacturing sub sector that has grown by 7.9 percent in 2013, and contributes 15 percent towards GDP,â€ Jayasinghe said.
â€œIs this adequate?,â€
â€œAs in the more developed countries, cannot the contribution from the factory industry sub sector be increased to 20 percent of GDP in the next 10 years to enable a more significant contribution?â€
â€œI strongly believe that if there is a sound and clear industrial policy framework and a conducive and investor friendly environment this is achievable.â€
â€œToday we are free to go about our business, interest rates are far more conducive to borrowers, exchange rates are free of sudden volatility, inflation is relatively stable, infrastructure developments has taken place at a pace that we havenâ€™t witnessed before,â€ Nilam Jayasinghe, Chairman of the Industrial Association of Sri Lanka said.
â€œHowever despite all these healthy indicators, private sector credit growth has seen a sharp decline during the past three years,â€
â€œThis is not a healthy trend if we are to aspire reaching those economic targets ahead of us.â€
Jayasinghe was speaking at the 23rd Annual General Meeting of the Industrial Association of Sri Lanka held recently.
Private sector credit growth, which was 34.5 percent in 2011, declined to 17.6 percent in 2012 and further declined to 7.5 percent in 2103.
It is now estimated to be two percent up to June 2014.