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Politics a downside for SL: ADB Outlook

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The Asian Development Bank (ADB) has opined that politics remain a downside risk for Sri Lanka’s growth prospects.

In its latest Asian Development Outlook (ADO) Update released yesterday whilst GDP growth forecast for Sri Lanka has been retained (at 7% for 2015 and 7.3% next year), political factors present some downside risks. 

“Political transition in Sri Lanka causes private investors to take a wait-and-see approach to new investment,” ADO said adding that political risk persists in Pakistan and Afghanistan as well.

According to the ADO the economic outlook for South Asia is for stronger growth in the subregion as a whole in 2015 than forecast in ADO 2015, now bumped up slightly to 7.3% from 7.2%. The projection for 2016 remains at 7.6%. 

South Asia’s scenario looks favourable as against 2.4% growth forecast for overall developing Asia this year and 3% next year.

By individual economy, however, projected growth rate changes are mixed, with much stronger growth estimated for Bangladesh in FY2015 (ended 30 June 2015) but slower growth for the Maldives and earthquake-struck Nepal.

Recent data revisions from India show that GDP grew by 7.3% in FY2014 (ended 31 March 2015), slightly slower than the 7.4% reported in ADO 2015. The underlying indicators suggest that India is on track to achieve the ADO 2015 forecast of growth at 7.8% in FY2015. 

The latest official estimates for economic growth in Bangladesh in FY2015 see growth coming in at 6.5% for the year, outperforming the 6.1% recorded in FY2014 and projected in ADO 2015 for FY2015. 

The forecasts for the Maldives is downgraded for 2015 and upgraded for 2016 because an expected surge in infrastructure investment has been pushed back a year.

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