Sri Lanka poised for production surge as trade diversion reshapes Asia’s supply chains – IMF

The latest Regional Economic Outlook (REO) for Asia and Pacific, launched by the International Monetary Fund (IMF) last Friday, highlights a profound and ongoing reconfiguration of global value chains that offer significant, though challenging, opportunities for economies like Sri Lanka.

- By NISHEL FERNANDO

The report confirms that recent global trade tensions and sharply higher effective US tariffs have spurred a tariff-induced trade diversion across the region, as companies seek to circumvent new trade barriers.

While the full impact is still unfolding, IMF’s analysis of the 2018-2019 US-China trade tensions reveals a consistent pattern: production has relocated from highly taxed source countries to other economies in the region with favourable preconditions.