The Sunday Leader

HSBC Estimates Lower Growth Rate

  • Compared to CBSL Projections

HSBC has estimated Sri Lanka’s economy to grow by 6.7% this year or close to 7%, 80 to 50 basis points less than the Central Bank of Sri Lanka’s (CBSL’s) estimate of 7.5%.

It also projects the economy to grow by 7.4% next year, in tandem with China, which HSBC’s Chief Economistfor India and ASEAN, Leif Eskesen said.

In contrast, India is expected to grow by a mere 5½ % this year and 6.6% in the next due to the slowness in making structural reforms and infrastructure development. India’s economy grew by 5% last year.

Eskesen speaking at the 174th AGM of the Ceylon Chamber of Commerce (CCC) held in Colombo on Thursday (June 27), further said that if Sri Lanka were to reach the economic standard of Thailand, it will have to invest in energy and other infrastructure related projects. Sri Lanka’s per capita GDP is US$ ($) 2,000 while that of Thailand’s is double that, at $ 4,000. The island aims at achieving a per capita GDP figure of $ 4,000 by 2016.

Going forward, Sri Lanka will have to improve its business climate, be foreign direct investor friendly and improve on its infrastructure. He said that tourism offers enormous potential to the island.

With global recovery expected by the year end, the country will have to watch out for inflation due to a rise in commodity prices. He said that Sri Lanka’s growth on purpose was curbed last year due to overheating that resulted in a crisis in its current account in 2011.

Overall, the island’s economy is looking positive, said Eskesen. However the island’s technical and tertiary education needs improvement. It also needs to trade more with India.

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