Home / TOP STORY/ 7% growth in 1H 2015, predicts CB Governor

7% growth in 1H 2015, predicts CB Governor


Comments / {{hitsCtrl.values.hits}} Views / Saturday, 6 June 2015 00:00


 

  • Says hopeful of reaching $ 4,000 per capita income mark by year end
  • Recovering agriculture will compensate for slowing construction industry 
  • Wants fresh focus on remittances including new data and payment methods from banks  

LEAD-PIC

‘It’s all looking up’ seems to be the message by Central Bank Governor Arjuna Mahendran – Pic by Lasantha Kumara

 

By Charumini de Silva

Concurring with growth projections made by international monetary organisations, Central Bank Governor Arjuna Mahendran is confident Sri Lanka’s economy will average around 7% during the first half of 2015, with growth picking up in subsequent years.

“By the end of six months this year, we will average around 7%. There’s nothing to worry,” a confident Governor told the Daily FT.

“I think things are looking good. Once we hit $ 4,000 per capita, the economy will shoot up. I am hopeful that we reach that level by the end of this year, in which case we can look at 8% to 9% economic growth in the next five years,” he added.

 

Sri Lanka’s economic growth is expected to decline to 6.9% in 2015 due to slowing construction activity, according to the World Bank, which has also warned private sector sentiment would be cautious till economic policies of the new Government stabilise. The International Monetary Fund (IMF) earlier in the year gave a growth outlook of 6-7%, and the Asian Development Bank (ADB) a growth of 7%. The country grew by 7.4% in 2014. Further explaining economic factors, Mahendran said that the agriculture sector was recovering after the drought last year, which was a good indication. However, he noted the construction sector had slowed down, mainly because the new Government was reviewing some of the infrastructure projects. 

 



However, he pointed out that agriculture picking up and construction slowing down would balance out the difference. 

“That way I think it will keep the economy evenly balanced,” he said. 



Further clarifying his point, the Governor said private construction such as housing was booming. 

“Exports are doing well. Now that the rupee is down by 2% against the dollar, that will also help competitiveness and exports will continue to grow. Exports and FDIs are the two areas we need to improve on. Those are the two areas we are focusing on. The Minister of industry and Commerce has his plans in the export sector. The BOI is developing its plans for FDIs. With those two I think in the medium term we could go beyond 7.5%.”



Commenting on remittances, Mahendran said that the country received a record $ 7 billion last year and would continue to grow. “Remittances are the critical component that really saved the economy for the last 10 years during and after the war,” he added.

“We are like the Philippines and the Mexicans, which are countries with huge expatriate populations and that is a different kind of an economic model from other countries where they stay back home and grow their own industries. We have to factor that in,” he noted. 



“Being an expatriate myself, I’m very keen on giving more opportunity to grow their own economy. At the end of the day, we all love our country. We send the money earned to relatives, to invest or to build houses. So we must grow this channel,” he pointed out.

The Governor said he would continue to focus on the importance of banks establishing a system for expatriate workers to easily remit their funds. 

Citing an example, he said: “In Philippines if a housemaid is working in Dubai she can directly and easily remit money every month on her mobile phone to a property developer who is building an apartment. The same way we could setup a payment system where I could remit some money via my mobile to my Sri Lankan account or to a Sri Lankan property developer.”

With such easy schemes, the Governor expressed confidence Sri Lanka could attract foreign exchange. He added that discussions were ongoing with banks to set up similar systems.

“We are talking to the banks. We are working on some options and I’ll announce it in a few months,” he assured.



Mahendran also noted the Central Bank was attempting to conduct more detailed studies on the makeup of remittances, including regional and gender divisions, which would help in meeting specific market needs.  

“We know that 50% is from the Middle East and the rest from other parts of the world. But who are the type of people who are sending those remittances and what’s the proportion between housemaids and other professionals? For that sort of information, we actually have to send people out and do a survey or ask the local banks receiving remittances to give us some details. We are starting that study at the Economic Research Department,” he said.


Share This Article

Facebook Twitter


DISCLAIMER:

1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.

COMMENTS

Today's Columnists

An executive presidency and a technocratic Cabinet accountable to Parliament

Thursday, 21 November 2019

Basil Rajapaksa of the winning party in the 2019 Presidential Election had said that the 19th Amendment (19A) has some good parts and some bad parts. The 19A indeed gives us much despite its flaws. However, the lack of a coherent architecture therein


Sibling wins, patriarch celebrates and minorities stunned

Thursday, 21 November 2019

Is there a more precious gift a family patriarch, who himself a former ruler, could expect to receive on his 74th birthday, than to see his own brother becoming the supreme head of the country he ruled? The victory of Nandasena Gotabaya Rajapaksa (GR


Air India over Colombo

Thursday, 21 November 2019

Amidst the busy politicking in November an unexpected appearance of quite a number of packets of air over the country and in particularly over Colombo caused some distractions and elicited few warnings of a different type. This is about the smog-la


Post-mortem on UNP defeat

Wednesday, 20 November 2019

I believe no post-mortems are necessary on the causes for defeat of the UNP candidate as the reasons were very clear seeing the bickering at the very first post-election meeting of the UNP hierarchy held earlier this week. Although at the election th


Columnists More