Sri Lanka, emerging countries should be watchful about Europe: IMF official

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

Apr 30, 2012 – (LBO) – Though the global economy is showing signs of improving, a slowing Europe and debt troubles which Sri Lanka and emerging Asia should watch, an International Monetary Fund official said. European fallouts could hurt emerging Asia through trade and financial channels, IMF’s resident representative Koshy Mathai said, at an economic forum organized by Sri Lanka’s Gamani Corea Foundation.

Euro Exposure

Emerging Asian countries sent as much as 50 percent of their exports to the Euro area, while advanced Asia and Latin America had a little as 10 percent less exposure to the region, he said.

“Sri Lanka exports about 36 percent of exports to the Euro area,” Mathai said. “Not the most exposed, like emerging Asia, emerging Europe but still not safe.”

He said Sri Lankan banks were not exposed to European bank debt and was safe in that area.

World growth was expected to dip to 3.5 percent in 2012, from 4.0 percent last year but is expected to rebound to 4.0 percent in 2014, Mathai said. However there was uncertainty.

Changes in capital flows, which were responding to developments in advanced markets were making economic management difficult for some countries.

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