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Wednesday, February 2, 2011

Sri Lanka needs to regain export share, focus on Asia: IMF economist

Feb 02, 2011 (LBO) - Sri Lanka needs to boost its export sector at least to regain where it was in the share of exports to Gross Domestic Product about 10 years ago, a visiting economist said.

The country must also better integrate with Asia which will be the dominant global region and export more diversified and sophisticated products, Anoop Singh from the International Monetary Fund told a public forum organised by the central bank.

Although many countries in Asia rely too much on exports and need to change by improving domestic demand and consumption, Sri Lanka's case was different, Singh said.

"This is because Sri Lanka's exports to GDP share has actually been falling for many years," he said.

"Probably Sri Lanka has the need to boost the export sector at least to regain where it was in the share of exports to GDP about 10 years ago. So for Sri Lanka, first let's try to rebuild the export trade where it was 10 years ago."

Asia is going to be a dominant global region and therefore integration with Asia is going to be very important because the region is going to be the fastest growing over the next 20 years, Singh also said.

Sri Lanka therefore must boost its integration with and exports to Asia.

"This is particularly important for Sri Lanka because the bulk of Sri Lanka's exports of goods and services now go to the US and Europe; 59 percent of Sri Lanka's exports go to advanced economies.

"Only a small proportion seem to go to Asian countries including India and China and other developing Asian countries."

The government's strategy of trying to become hubs in aviation, finance and other sectors was thus well suited to this requirement, Singh said.

Sri Lanka also needs to have more diversification of product.

"Even today after the diversification that has taken place we still see how heavily Sri Lanka's exports remain concentrated on textiles and garments and other industrial goods and tea - probably over three-quarters (of exports)."

A shift towards exporting more sophisticated products as successful advanced Asian economies have done is also important to accelerate growth, Singh said.

"Some countries have moved to more sophisticated areas than Sri Lanka. So there has to be a shift in product and a shift in sophistication - the two are probably linked."

source - www.lbo.lk