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Sri Lanka’s plans to transition into a high-income, knowledge-based economy through ambitious fiscal reforms, new trade deals and added-value exports are explored in a new report from the global research and consultancy firm Oxford Business Group (OBG).
‘The Report: Sri Lanka 2018’ tracks growth in the tradeble sector as the country targets $20bn in export earnings by 2020, boosted by the reinstatement of EU GSP+ status which helped to improve performances in key segments such as textiles and clothing last year.
While shining a spotlight on Vision 2025, the country’s blueprint for economic development, OBG’s publication also explores Sri Lanka’s efforts to reform the tax code and rationalise expenditure following its $ 1.5 b deal with the IMF.
Buoyed by a combination of changing demographics and a pipeline of mega-projects, the construction industry has rallied after a slowdown in 2015 to notch up double-digit growth, despite rising input costs. ‘The Report: Sri Lanka 2018’ considers the key role that international partners are playing in galvanising the sector, while also examining the positive effect that proposed reforms could have on further boosting foreign interest in local property.
Sri Lanka’s rapidly growing tourism offering is another focus. OBG analyses the country’s plans to tap new markets and strengthen air routes, in line with its target of increasing visitor numbers to 4.5m by 2020.
Plans to modernise its important agricultural industries and improve productivity through investment in technology are also examined, alongside the steps being taken to improve the digital innovation ecosystem and nurture high-value startups.
‘The Report: Sri Lanka 2018’ contains contributions from President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe, together with a detailed sector-by-sector guide for investors and the business community.
It also features a wide range of contributions from other high-profile personalities, including: Mangala Samaraweera, Minister of Finance and Media; Greg Hands, UK Minister of State for Trade Policy; Changyong Rhee, director, IMF Asia and Pacific Department; Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka; and Qitao Liu, Chairman, China Communications Construction Company.
Commenting after the launch, Oliver Cornock, OBG’s Editor-in-Chief, said that positive developments documented in the new report included a new free trade agreement (FTA) with Sinagpore and a proposed FTA with China that could enable Sri Lanka to capitalise on its strategic location and support a new phase of economic progress.
“Buoyed by a period of extensive post-war reconstruction and a diverse range of crop exports, Sri Lanka averaged growth of over 6% between 2008 and 2014,” he said. “While the rate of economic expansion has moderated more recently, wide-ranging reforms, corrective monetary and fiscal policies, and a strong performance across the industrial sector indicate that the country’s leaders are making the changes needed to facilitate sustainable, long-term development.”
Patrick Cooke, OBG’s Regional Editor for Asia, added that Sri Lanka’s impressive growth story, rising domestic demand and the implementation of pro-growth structural reforms had all helped to improve the investment climate last year, while plans to facilitate more public-private partnerships were expected to generate further international interest.
“Sri Lanka has worked to expand the non-agricultural economy, with the result that export outflows and investment inflows are both primed for growth,” he said. “With key industries set to gain from the reinstatement of EU GSP+, and public finances expected to benefit from a simplified, more efficient tax framework, our report points to a bright, medium-term outlook.”
‘The Report: Sri Lanka 2018’ marks the culmination of more than 10 months of field research by a team of analysts from Oxford Business Group. The publication assesses trends and developments across the economy, including those in macroeconomics, infrastructure, banking and others. The Report: Sri Lanka 2018 is available in print and online.
