Sri Lanka has a possibility of benefiting from China redirecting its traffic for export from Sri Lanka to circumvent the US tariffs said a member of the Standard Chartered Global Research team who was in Sri Lanka last week to hold its annual Global Research Briefing (GRB).
He said Vietnam and Mexico benefitted when Trump imposed tariffs during his first term in office. However, he said Sri Lanka will have to be consistent with policies if it is to face external socks and boost trade.
“Sri Lanka is quite stable under the IMF program but it should stick to the bailout program to stabilize the economy,” Global Head of Fixed Income Research and Head of Asia Research Kaushik Rudra.
The 25% tariffs imposed by Trump on imports from Canada and Mexico took effect early last week with fresh taxes on Chinese goods igniting trade wars which could slam economic growth and raise commodity prices in the US which is yet reeling from years of high inflation.
On the downside the standard Chartered global team noted that US tariffs would further weaken Europe which is yet under the pall of the Ukraine Russia war which triggered an economic slowdown and exert pressure on the Chinese economy. The team also said Trump tariffs come at the expense of the US economy.
In all the global economic picture is currently highly volatile and mitigating its adverse impact with careful thought out strategies is crucial, the global team said.
They said that Sri Lanka has done quite well in the recent times to stabilize the economy which the IMF has projected to grow in the coming years.
However, it noted that there is still room to catch up in terms of foreign direct investments.
“The Colombo Port City would be a good foreign investment attractor,” said Head of ASA FX Research at Standard Chartered, Divya Devesh.
The briefing themed ‘Reverberations’ brought together the bank’s global research team to share insights on the economic outlook for the global markets and Sri Lanka for the first half of 2025.
The event was held on March 3 at the Galle Face Hotel Colombo. Around 150 Corporate, Commercial and Institutional Banking (CCIB) clients of Standard Chartered Bank were present.
During the briefing, the Global Research team addressed various questions and shared their views on the global and Sri Lankan economic outlook for the year ahead. The team discussed their forecasts for the year as the global economy continues to navigate multiple headwinds in the first half and anticipated shifts in the second half with China’s reopening.
The team also discussed the ongoing debt restructuring and critical reforms that Sri Lanka is undertaking, which will shape the economy’s future in 2023 and beyond.
They explored the path for debt sustainability in Sri Lanka and how the Rupee will behave during and after the restructuring process. Regarding Standard Chartered Bank’s support of the government’s efforts to face economic challenges, the team expressed hope for a positive outcome through debt restructuring and favourable economic outputs.
