Sri Lanka has lower social unrest risk from inflation: S&P

Mar 08, 2011 (LBO) - Sri Lanka is among Asian countries that had lower risks of social unrest from high inflation due to popular administrations, higher growth and lower unemployment, Standard and Poor's Corporation, a rating agency said. S & P said in a sovereign rating review of the Asia Pacific region that inflation has become an "important risk" to economic and social stability.

These countries included Vietnam, Sri Lanka, India, Indonesia, Mongolia, Cambodia, Cook Islands, Fiji, Pakistan and Bangladesh.

"In a number of other countries, the risk of social unrest is present but mitigating factors are currently strong," S & P said.

"These are China, Vietnam, Sri Lanka, Malaysia, and Cambodia; the risks in these countries are mitigated by some combination of strong growth, low unemployment, and popular support for the government."

The region's central banks have almost all begun tightening policy by now, except Sri Lanka.

Sri Lanka's inflation at 7.8 percent in February is higher than some of the countries which have tightened policy. But the island's populations had suffered much higher levels of chronic inflation from the Central Bank in the past of around 20 to25 percent.

S & P said private sector cred