The manner in which Sri Lanka brought down the inflation rate from 70% to a single digit lower than 4% was very impressive said investor, author, fund manager Ruchir Sharma during a guest lecturer at the Central Bank yesterday which was also attended by Governor CBSL, Dr. Nandalal Weerasinghe.
He said that many countries who suffered a huge economic crisis similar to Sri Lanka are yet to achieve this kind of positive development. He also said one of the countries that rose from economic doldrums in recent times was Greece which was condemned as a write off. “But today they are the shining star of Europe.”
A columnist for the Financial Times he said though there are nearly 200 countries; only around 40 of them are fully developed while some others fall as developing countries. But these developing countries have been having that label for nearly 40 years and have not moved up to the next tiers. He said that the only country to move up from developing to developed was South Korea in the 1980’s and since then no other country has followed them. He also said that Sri Lanka too has been ranked as a developing country for many years but has not moved up. Sharma also said it was very unfortunate as Sri Lanka had many positive landmarks in education, health and other sectors.
“Sri Lanka on many occasions showed promise in moving to the next level of development but somehow it never happened.” Sharma commenting on the reforms said this subject is addressed only when a country is facing an economic crisis. “If not this subject is played down.” He said in Sri Lanka too there is now a good opportunity to enforce reforms as the country faced an economic crisis. Speaking on the subject of democracy vs non democratic governments he said that the latter is at a higher risk of facing economic crisis as if a bad economic decision is implemented it would be enforced with an iron fist and will have negative consequences to that country. “However in an democratic country there are many check and balance systems which mostly prevent ‘bad’ economic policies being implemented.
He also identified intra regional trade as a key pillar for any country to progress but said that sadly in the SAARC region this does not happen as frequently as other regions. “There is hardly any inter regional trade between Africa and the SAARC region.”
Sharma said for any country to have a faster economic growth rate a young working population is needed and China is now facing huge manpower shortages due to its ‘one family one child policy’ that was implemented a few decades ago.
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