This year, Sri Lanka has recorded its highest growth since Independence. As dicey as the economy looks, it’s important to remember how far the country has come. The nation has a stable, island-wide government for the first time, like, ever, there are no active insurrections, and we’re seeing a period of sustained investment and improvement in peoples lives – including but not limited to the right to have one.
Sri Lanka’s economy grew by 8.3 percent last year, the fastest expansion since independence from Britain in 1948, the census and statistics department said Thursday.
The rate compared with an expansion of 8.0 percent in 2010, the first full year after government forces defeated Tamil Tiger rebels in May 2009 and declared an end to nearly 40 years of fighting…
Last year, per capita income increased to $2,836, up from $2,400 the previous year. Tourism has been a big growth area after the end of the Tamil separatist war, with earnings in the sector jumping 41.4 percent last year. (AFP)
God knows the government has been messing it up in style this year, raising taxes, prices and making the engorged bundi of corruption visible under an ever more threadbare shirt. However, these are first world problems. Which are better problems than we had before. Which – while not yet great – is nice. So thanks for that Mr. Rajapaksa. Now please do a whole lot better.
High growth in the economy is indeed welcome, although I am not sure they can be ascribed to any particular economic policy of the present government. Ending the war to make it possible to the include produce from the north and east and the growth in tourism are the most significant factors, and for that we certainly have to thank the government. However, the sustainability of the growth and the levels of debt being incurred to create this growth should be carefully thought out.
Also, I think the government gives too much prominence to the rise in per capita income, which is welcomed. However this figure needs to be considered in relation to the growing income inequality (see increasing Gini coefficient reported in HIES 2009/10 report). If the growing per capita income leads to complacency on issues such as income inequality, youth employment, etc, we are going to have bigger problems down the road.
So, whilst I am unconvinced that the current economic problems are ‘good ones to have’, I do agree with your assessment that the government needs to a whole lot better.
Sorry, I should clarify that in the 2nd para I meant to say that I welcome the increasing per capita income, not the fact the government gives this too much prominence.
It’s really difficult for countries like sri lanka to have high growth and low gini at the same time. We need to encourage our private sector by giving them lower taxes & other incentives. This automatically means that the rich, those who have capital, get richer. While the poor will only see a trickle down effect.
Hopefully, 30-40 years from now, our economy will be developed enough for us to not bother to much about rapid growth and look at equity.
“God knows the government has been messing it up in style this year, raising taxes, prices and making the engorged bundi of corruption visible under an ever more threadbare shirt. However, these are first world problems.”
How on earth are these first world problems? If anyone is affected by higher taxes, prices etc (basically the economy) its the poor i.e. the developing world. If you buy the whole diminishing marginal utility story economic growth is the main third world problem after security of person.
I agree that securing a monopoly of violence and stopping the war was a good thing, but can you really call the problem of growth a third world problem.
I think the GINI point is unneccesary at this point in time. Government reforms can cause a pareto improvement (everyone is better off without anyone being worse off) with respect to both the GINI co-effecient and per capita GDP. E.g. Indi’s Paypal story, policy stability, not doing stupid things in the international arena, reforming the legal system so it works etc etc etc.
Encouraging the private sector is definitely needed. However, I don’t see 30-40 years of trickle down economics as the model we should actively adopt. Whilst making the Gini coefficient smaller is not the right target for the short term, there should be some plan to decrease it in the long term. Is there such a plan?
For example, the government should make it easier for small investors (incl. from overseas) to provide capital to small enterprises. In particular, the government should provide mechanisms for capital investments in enterprises that have a return in terms of benefit to the local community (e.g., a community run bus service for rural villages). I don’t see any evidence of this type of activity, but would happy to be corrected if it does exist.
Government has no incentive for “policy stability, not doing stupid things in the international arena, reforming the legal system”. They don’t need to care as long as people do not demand these things and make these things their primary concern.
High time the opposition got their shit together and at least try to make a real comeback with a sound economic plan, propose strengthening of individual rights (which might solve the ethnic issues too, by at least making it possible for minorities to complain about their constitutional rights) and educate the masse on these regards and propose proper law enforcement.
With the 18th amendment, I don’t think cares about these things and they know the majority vote base doesn’t either, which is sad, because people should learn that politicians should be afraid of them and not the other way around. That’s also never going to change, unless the judiciary and the police have a backbone to go do what’s right by cleaning up criminals in the government first (not necessarily corrupt officials, but down right murderers and drug traffickers).
Who are the capable advisors for the government to plan something like this right now? Also would the government listen to such advisors completely or only half heartedly placing the government ministers own personal gain first, and then any sound policy advice? As it is, I feel personal agendas will override any good policy.
Even during war, our economy was generally growing at like 4-5%. I don’t think the govt. Can be attributed to this growth. Infact increasing interest rates and higher taxes have already forced central bank to drop the growth rate this year to 7%.
Indi, the subject of your article is very misleading!
And whilst writing on topics of general interest are your forte, believe sensitive matters such as the state of the country’s economy should be analysed from a knowledgeable economic perspective.
Whilst it’s your blog and you are free to express your thoughts and opinions as you please; singing hossna’s for and on behalf of the maha rajathumanani, is a very disturbing and noticeable trend that has been emerging in your writings since of late.
Almost all the comments made here are noteworthy and certainly, the Stats would reflect on a positive side to show the GOSL in a brighter light, whereas in reality, the the poorest of the poor citizens are finding it hard to meet the ever rising cost of everything – growth or no growth!