ADB optimistic on Sri Lanka's growth, downgrades rest of South Asia

The Asian Development Bank (ADB) has indicated optimism over Sri Lanka's growth prospects though it downgraded the rest of the South Asian region overall, it said in a latest report. "The Sri Lankan economy is forecast to grow by 6.8 percent in 2013 on the back of a strong performance in the remaining quarter of the year. Healthy growth in 2013 and acceleration to 7.2 percent in 2014 will be supported by further monetary easing and improved electricity generation that will power growth in domestic industry," the ADB said in a supplement released to its Asian Development Outlook (ADO) 2013. The forecast on Sri Lanka is the same as those made in ADO, which was originally released in April this year, whilst it is also higher than South Asia's average of 5.6 percent for 2013 and 5.7 percent for 2014. Nevertheless, the estimate remains below the government's projection of 7 percent or 7.5 percent gross domestic product (GDP) growth for 2013. The ADB's latest supplement said by contrast (to Sri Lanka), Afghanistan, Bangladesh, Nepal, and Pakistan are expected to report slower growth in 2013 than in 2012, as some of these countries face political transitions that could hamper economic policy making. It said the South Asia sub-region is expected to expand by 5.6 percent in 2013 and pick up momentum to post 6.2 percent growth in 2014. South Asia's largest economy, India, is expected to see growth moderate to 5.8 percent in 2013 against the earlier projection of 6 percent. While this is higher than the 5 percent posted in 2012, growth remains constrained by supply-side bottlenecks, as reflected in the continued slowdown in fixed capital formation, weakness in the industrial sector and sluggish progress in pushing through badly- needed structural reforms, the report said.