Jan 24, 2017 (LBO) – Sri Lanka should keep a keen eye on the developments in the West, the traditional export markets, but should reach out to the East for trade and investments, an economist said.
Chief Economist of Standard Chartered Bank for Asia, David Mann was responding to LBO’s question on what should be Sri Lanka’s economic survival kit in the unfolding global landscape.
He was making specific reference to the surge of populism and nationalism in the West and the rising economic power of Asia.
It has been estimated that China, Asian nations and the South Asia will account for over 60 percent of global growth.
Mann is a member of Standard Chartered’s Global Research Team presently in Colombo. The other Standard Chartered’s key economic researchers include Dave Murray (Head, Global Research), Anubhut Sahay (Head, South Asia Economic Research), Saurav Anand (Economist, South Asia) and Priya Narain Balachandani (Energy Analyst).
The global economy could expect some surprising shocks in the context of current social political climate,observed Dave Murray (Head, Global Research).
He advised investors to mitigate emerging risks through diversification and hedging.
Sahay prescribed a firm commitment to the reforms recommended by the current International Monetary Fund program to the survival kit for Sri Lanka.
While Anand said building sustainable foreign exchange reserves is of vital importance to Sri Lanka.
The island nation has the habit of reaching out to IMF to resolve frequently occurring balance of payment crises.
Anand further added that attracting fresh FDI is important to build sustainable forex reserves and said that Sri Lanka should address issues pertaining to policy framework to improve investment climate.
Creating ‘fiscal space’ to counter global and domestic economic challenges will bring stability and facilitate growth, he said.
Corporate leaders have often cited policy inconsistencies as a key barrier to improve Sri Lanka’s competitiveness as an investment destination.
From governance perspective, improving transparency, accountability and execution capabilities are critical to drive growth and also to nurture social justice in emerging economies, Murray, head of Global Research said.
Analysts have often related deficiencies in execution capacity as a prime reason for the limited success the government has met with in translating the rhetoric on economic growth to positive economic results.
Standard Chartered expects the oil prices to be supported by the supply deficit in energy sector.
“The oil price is likely to reach around US 65 dollars per barrel during the year,” said Priy Narain Balachandani.
“The demand will continue to rise albeit at a slow rate of growth. Post – sanction supply from Iran and the increased supply of shale oilin the United States may not be able to fill the demand – supply gaps in the short run.”
This is the second consecutive year the global research team of Standard Chartered visited Sri Lanka, as a part of their its Global Research Briefing circuit.