Sri Lanka must improve trade ties with emerging Asian growth centres but not write-off the United States and Europe just because they are in a weak phase, an economist said.
The island must also take a long-term strategic view in its foreign policy and not allow "antagonisms stemming from the (ethnic) war" to affect economic ties, said Anushka Wijesinha, an economist at the Institute of Policy Studies, a think-tank.
The country must also find ways of "productively piggy-backing" on India's accelerating growth and growing market, he told a recent forum at the American Center.
Wijesinha said Sri Lanka must "charter a smarter course" that would enable it to take advantage of the changes taking places in the global economy.
Although the global centre of economic gravity was shifting to the east and this was clearly the 'Asian century', the Western economies of the US and Europe that had been dominant must not be written off.
"About 55-60 percent of our exports go to the US and EU, although they are under stress," Wijesinha said.
Writing off the West as a 'weak horse' was premature, given their inherent strengths such as capacity to innovate and adapt and a younger workforce in the case of the US.
"Sri Lanka cannot afford to write off the West as a 'weak horse' and maintaining a right balance (between East and West) is a critical challenge."
Wijesinha also warned that strained ties with the West over allegations of human rights abuses in Sri Lanka's ethnic conflict should not be allowed to affect economic relations.
The island's 30-year war ended in 2009 but Western governments have been pressing for a probe into alleged human rights abuses in its final phase when government forces defeated Tamil Tiger separatists.
The EU has refused to extended its GSP Plus trade deal giving duty free access to Sri Lankan exports over the alleged rights abuses.
Sri Lanka has turned East for aid, investment and political support in recent years particularly to China, Russia and Iran as well as India.
"We must guard against allowing antagonisms stemming from the war to affect economic affairs," Wijesinha said.
Sri Lanka should also seek closer economic ties with neighbouring India whose economy was booming and whose huge market was accessible with a free trade deal.
"We need to find ways for Sri Lanka to productively piggy-back on India's growth and seek closer economic integration with India
Economist
