Should Sustaining Rapid Growth Remain Elusive? No, Sri Lanka Can Make It

The promise of accelerated growth
The end of the conflict has raised expectations regarding the growth prospects of the country. However, a lesson to be drawn from the experience of 2010 and 2011 is that a sustained accelerated growth trajectory cannot be achieved by demand management policies alone ie adjustments to monetary, fiscal and exchange rate policies. The structural constraints that have persisted for several decades have invariably triggered an over-heating of the economy whenever growth accelerates. This experience was repeated again and resulted in the introduction of the stabilization measures of February/March 2012. Growth slowed down sharply since then.