By Deshal de Mel, Research Economist – IPS An article recently featured in the Economist (http://bit.ly/aBpGB1) outlined some of the developments in the world’s major emerging markets – particularly focusing on the evolution of these economies from sources of cheap labour to being hubs of innovation. The Sri Lankan government has announced ambitions of becoming [...]

> By Deshal De Mel – Research Economist – IPS In the final quarter of 2009 Sri Lanka’s economy continued to recover from a poor economic performance in the first half of 2009. The 6.2% fourth quarter growth signaled a return to pre-crisis growth levels and the economy has thus completed a near perfect V [...]

By Deshal de Mel and Dharshani Premaratne One of the persisting impacts of the global economic crisis has been on employment levels in America, Europe and developing nations. Whilst growth finally returned to the US in the third quarter of 2009, unemployment increased to 10.2% in October 2009. In Sri Lanka, for instance, unemployment increased to [...]

The latest GDP statistics are encouraging, nonetheless questions remain. For instance, to what extent is the economic recovery in Sri Lanka driven by fiscal expansion as opposed to underlying private sector demand? If this is the case, how sustainable is the recovery, given the need for curtailing fiscal expansion (due to for instance IMF Agreement targets)? Will post war private sector demand be able to compensate for reductions in public expenditure?

Asia’s growth prospects and drivers were reviewed in our earlier post; we now take a closer look at Sri Lanka. Sri Lanka’s economy began a serious downturn in the latter half of 2008. Quarterly GDP growth declined from over 7% in the 2nd quarter of 2008 to 4.3% in the 4thquarter of 2008. As expected, the economy suffered further in the first half of 2009 but with a slight improvement in the 2nd quarter of 2009