Sri Lanka should not be selective in bilateral trade

14 January 2011 07:32 am Views - 5507

Author of the report Andrew Burns is seen video conferencing an audience in the World Bank office, Colombo. (Pic by Pradeep Dilrukshana)

By Sumaiya Rizvi
Sri Lanka needs to focus on getting into regional or bilateral trade agreements that are not exclusive to only a few countries if they are to reap the benefits of global economic trade, Manager of the Development Prospects Group Andrew Burns said yesterday during a video conference held at the World Bank headquarters in Colombo to launch Global Economic Prospects 2011 report.
"Developing countries including Sri Lanka can create markets through regional trade agreements but they should not make them exclusive or unilateral to one country limiting their activities with another country," Burns said. He is also an author of the Global Economic Prospects 2011: Navigating strong currents.

Meanwhile the World Bank's senior country economist for Sri Lanka Susan Razzaz said the country's fiscal policy front is managed well and therefore Sri Lanka is in line with repaying loans and financing the deficits.

The report Global Economic Prospects 2011 looks at the South Asian region and its developing countries that managed to come out of the global economic crisis least affected.
"In fact developing countries contributed almost half of the global growth" Burns noted.
Further explaining his point he said they expected the reverse when it came to the recovery of the developing countries as they were expected to do far worse than the developed countries since their recovery would largely be dependant on the consumer demand of the developed countries. The World Bank estimates global GDP, which expanded by 3.9% in 2010, will slow to 3.3% in 2011, before it reaches 3.6% in 2012. Developing countries are expected to grow 7% in 2010, 6% in 2011 and 6.1% in 2012. They will continue to outstrip growth in high-income countries, which are projected at 2.8% in 2010, 2.4% in 2011 and 2.7% in 2012.

The report also warns of the rising commodity prices that could push inflation levels ultimately affecting growth. Burns highlighted concern about rising commodity prices, including food and fuel, driven by loose monetary policies in the developed countries and solid demand in the emerging economies.
"Although real food prices in most developing countries have not increased as much as those measured in US dollars, they have risen sharply in some poor countries," Burns said. And if international prices continue to rise, affordability issues and poverty impacts could intensify, He added.