The South Asian economies recover but the recovery remains fragile and uneven, and most countries are far from pre-pandemic trend levels, says the World Bank in its twice-yearly regional update.
The latest South Asia Economic Focus titled Shifting Gears: Digitization and Services-Led Development projects the region to grow by 7.1 percent in 2021 and 2022. While the year-on-year growth remains strong in the region, albeit from a very low base in 2020, the recovery has been uneven across countries and sectors. South Asia’s average annual growth is forecast to be 3.4 percent over 2020-23, which is 3 percentage points less than it was in the four years preceding the pandemic.
India’s economy, South Asia’s largest, is expected to grow by 8.3 percent in the fiscal year 2021-22, aided by an increase in public investment and incentives to boost manufacturing. In Bangladesh, continued recovery in exports and consumption will help growth rates pick up to 6.4 percent in fiscal year 2021-22. In Maldives, GDP is projected to grow by 22.3 percent in 2021, as tourism numbers recover.
“The pandemic has had profound impacts on South Asia’s economy. Going forward, much will depend on the speed of vaccination, the possible emergence of new COVID variants, as well as any major slowdown in the momentum of global growth,” said Hartwig Schafer, World Bank Vice President for the South Asia Region. “While short-term recovery is important, policymakers should also seize the opportunity to address deep-rooted challenges and pursue a development path that is green, resilient and inclusive.”
COVID-19 has left long-term scars on the region’s economy, the impacts of which can last well into the recovery. Many countries experienced lower investment flows, disruptions in supply chains, and setbacks to human capital accumulation, as well as substantial increases in debt levels. The pandemic is estimated to have caused 48 to 59 million people to become or remain poor in 2021 in South Asia.
As countries build back, they have a chance to rethink their long-term development models.
The role of services in the region’s economy has been increasing amid rapid technological change and the accelerated structural transformation of global economic activity in response to the pandemic. The adoption of digital technologies makes services more tradable, enables services to increase productivity of other sectors—including manufacturing—and creates new markets. Some South Asian countries are increasingly providing business and professional services that add value to manufacturing and play a key role in global value chains.
“Countries in South Asia have a strong comparative advantage in exporting services, particularly business processes and tourism, whereas they have struggled to break into manufacturing export markets,” said Hans Timmer, World Bank Chief Economist for the South Asia Region. “To realize the potential of the services-led development, the region needs to rethink regulations and establish new institutions to support innovation and competitiveness.”
GL: Suspension of IMF bailout highlights failure to meet anticipated revenue targets
By Shamindra Ferdinando
Top Opposition spokesperson Prof. G. L. Peiris yesterday (02) said that the government should take full responsibility for the suspension of USD 2.9 bn IMF bailout over Sri Lanka’s failure to achieve the anticipated revenue mobilisation.
The former External Affairs Minister found fault with the government for tax concessions granted to investors and the failure on its part to collect taxes, in spite of reaching an agreement with the IMF in that regard.
Referring to the declaration made by IMF delegation head Peter Breuer that the second tranche of about $330m would be delayed pending Staff-Level Agreement, Prof. Peiris pointed out that Sri Lanka and the lending agency had reached a staff-level agreement in early September last year.
Sri Lanka received the first tranche of USD 330 mn in the third week of March this year in terms of the Extended Fund Facility (EFF), spread over a period of four years.
While pointing out that revenue mobilisation had improved, the IMF said revenue was expected to fall short of initial projections by nearly 15 percent by the end of this year.
Addressing the media at the Nawala Office of Nidahasa Jathika Sabhawa, Prof. Peiris said that though the government tried to put on a brave face, the consequences of the indefinite delay could be quite catastrophic. He said the suspension of the programme could undermine debt restructuring talks with external creditors, governments, lending agencies and the commercial market.
Prof. Peiris said that the suspension of the programme, just after the release of the first tranche, was a matter for serious concern as the unexpected development could cause further erosion of investors’ confidence in the Sri Lankan economy.
Sri Lanka has obtained IMF assistance on 16 occasions.
Chairman of the Sectoral Oversight Committee on National Economic and Physical Plans Mahindananda Aluthgamage on Sunday told The Island the country was paying a very heavy price for the failure on the part of the Inland Revenue, Customs and Excise Department to collect the due taxes. Alleging that unpaid income taxes alone, over the past 15 years, amounted to a staggering Rs 904 bn, whereas revenue collecting authorities so far managed to collect Rs 1,643 bn though they were given a target of Rs. 3,101 bn for this year.
Prof. Peiris said that corruption in the public sector procurement process undermined the economic recovery process. The government defeated the Opposition moved no-confidence motion against Health Minister Keheliya Rambukwella over corruption in the public health sector, Prof. Peiris said, asserting that the IMF must be aware of how the government encouraged waste, corruption, irregularities and mismanagement.
Prof. Peiris urged the government to take tangible measures to address the concerns of the IMF. Unfortunately, the government sought to deceive the public by claiming that the process was on track and would proceed following staff-level agreement, he said. He asked whether the government wanted the people to believe there would be staff-level agreements before the release of each tranche.
Prof. Peiris said that the government should correctly identify the warning issued by the IMF. It would be the responsibility of the Wickremesinghe-Rajapaksa government to take remedial measures without further delay.
LPBOA demands bus fare hike
By Rathindra Kuruwita
Lanka Private Bus Owners Association (LPBOA) head, Gemunu Wijeratna on Monday (02) said they needed a five percent increase in bus fares following Sunday’s diesel price hike.
On Sunday, CPC, LIOC and Sinopec increased diesel prices by 10 rupees per litre.
Wijeratna said that the private bus owners had not increased bus fares when diesel prices were increased by 35 rupees per litre recently.
“With the latest price increase, short distance buses will lose Rs 1,000 a day. Long distance buses will lose Rs 2,500 a day. We can’t lose money like this. We want at least a five percent bus fare hike,” he said.
School transport providers have decided not to increase their charges.
Discourse on crisis in Lankan health sector at CSR
A discourse on the crisis in Sri Lankan health sector, under the theme ‘What ails the health sector? What solutions?’ is scheduled to be held at 4.00 p.m. on Thursday, 05 October 2023, at the Centre for Society & Religion (CSR) Auditorium, 281, Deans Road, Colombo 10, under the auspices of the Socialist Study Circle. The speakers will be Dr. Vinya Ariyaratne, Consultant Community Physician, President, Sri Lanka Medical Association, Dr. Ananda Wijewickrama, Consultant Physician, National Institute of Infectious Diseases and Ravi Kumudesh President, Academy of Health Professionals. The discourse is open to the public.
Oil cartel leader warns of prolonged high prices
Defiant Trump turns up at $250m New York fraud trial to blast ‘scam’
Runs for de Kock, but New Zealand clinch rain-hit warm-up in Thiruvananthapuram
‘Dates have the highest sugar content to fight Coronavirus’
Sunday Island 27 December – Headlines
#Sundayisland Sunday Island- 31 January- Headlines
Sports5 days ago
Jayantha Paranathala passes away
Latest News3 days ago
Fate of India ties, democracy in balance as Maldives votes in run-off
Business6 days ago
Placing SL as a world class logistics hub: the challenges
Features6 days ago
Unlocking shareholder value: How finance professors enrich corporate governance, maximise wealth
Latest News7 days ago
Mahindananda Aluthgamage calls for tax revenue boost and overhaul of collection system
Editorial6 days ago
News3 days ago
President orders probe into judge’s resignation
Sports6 days ago
Sri Lanka rope in Hemantha for injured Hasaranga