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Spotlight: Econ Op-eds in Summary (Week ended 2nd December'20)



1. Growth prospects diminishing despite Central Bank’s easy money policy

By: Professor Sirimevan Colombage

· Although a low interest rate environment can be positive for businesses, it hasn’t resulted in a lot of benefit for private individuals as shown by low credit growth. Instead, it has mostly gone towards cheap borrowings for the government to repay domestic debt.

· However, this will not do much to alleviate the growth dilemma faced by the country this year. Targeted monetary action might actually be worse, since the sectors identified could be discretionary and politically motivated. Additionally, artificial capital controls could repress the financial sector’s performance as well.

· Since current growth challenges began before the pandemic, Sri Lanka will need to develop its lagging growth drivers, including education, research, and technology use. This will enable the country to instil a faster recovery than predicted, and perform similarly to the knowledge-based economies of South East Asia.

For the full article – Refer Daily FT

2. Future of our economy and nation will be what we make of it: Hans

By: Dr. Hans Wijesuriya

· The post-COVID recovery needs to be based on the effective execution of a public-private shared vision for economic revival. This should be driven by three principles. Namely, the protection of life and livelihood, achieving a V shaped economic recovery and the need for bold and innovative measures.

· In taking action towards these goals, fiscal consolidation, maintenance of macro-stability and increasing sector competitiveness in a context where global trade is being reconfigured in favour of domestic production should be some of the priorities for the government. It is important for the private and public sectors to work together towards these.

· These factors become especially important in a world of changing technology. This would create the enabling environment to allow businesses to take advantage of the lower interest rate environment and budget 2021 incentives to drive the engine of growth towards achieving this shared vision for economic revival.

For the full article – Refer Daily FT

(Compiled by: Chayu Damsinghe & Travis Gomez)

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.

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