Sri Lanka post-war growth shift smaller

May 27, 2013 (LBO) – A post-war growth spurt is temporary and there was no ‘structural shift’ to eight percent a year from six, needing policy changes, an economist said, echoing a call by the International Monetary Fund to improve policy. Harsha De Silva, who is also a legislator for the opposition said while there were debates about the accuracy of government gross domestic product numbers growth increased to about 8 percent immediately after a 30-year the war ended but it was not sustainable.

He said while growth can go up and fall in some year due variations in a business cycle, the claim that economic growth had shifted to about 8.0 percent a year was not correct.

Cyclical Path

“What that means is we have seen a boom-bust cycle along a growth path that would have been perhaps 7.0 percent,” de Silva told reporters.

“What the IMF is saying is that in the medium term instead of an 8.0 percent growth we will see a 6.8 percent growth, and any booms and busts along that 6.8 percent growth path.”

“If we are to have 8.0 percent growth there has to be serious adjustments in fiscal policy.”

In the 1980s and 1990s Sri Lanka had a growth path of about 6.0 percent.

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