Sri Lanka News Updates with Discussions

Sri Lanka's Economic Growth Probably Slowed in Third Quarter

By Anusha Ondaatjie

Dec. 28 (Bloomberg) -- Sri Lanka's economic growth probably slowed for a second quarter as interest rates at a four-year high and renewed violence in the island's civil war hit spending.

The South Asian economy expanded 7 percent in the third quarter from a year earlier, after a 7.6 percent gain in the three months to June 30, according to the median forecast of five economists in a Bloomberg News survey. The central bank is due to release the figures in Colombo tomorrow at noon.

The Central Bank of Sri Lanka on Dec. 15 raised its key interest rate to the highest among 14 Asia-Pacific economies tracked by Bloomberg to cool inflation that's climbed to a 10- year high. Sri Lanka's economy may expand more than 8 percent in 2007, the fastest pace in almost 30 years, if political violence on the island can be curtailed, central bank governor Ajith Nivard Cabraal said last month.

''There is a slowdown in the growth momentum and if rates continue to rise, it will affect future investment,'' said Yolan Seimon, research manager at John Keells Stock Brokers Ltd. in Colombo. ''We also don't foresee a major turnaround for the better on the peace process.''

Sri Lanka's central bank has lifted interest rates four times this year to curb the pace of price increases.

Consumer prices in the capital Colombo rose 19.8 percent in November from a year earlier, after increasing 17.2 percent in October, the Department of Census and Statistics said Nov. 30. That's the most since October 1996.

Renewed Violence

Sri Lanka's peace process collapsed as violence escalated this year and talks in Geneva in October ended in failure. The Liberation Tigers of Tamil Eelam have been fighting for two decades for a separate homeland in the parts of northern and eastern Sri Lanka it controls, in a conflict that has killed more than 60,000 people.

President Mahinda Rajapaksa, elected in November 2005 with a mandate to renegotiate a peace treaty with Tamil separatists, is raising spending on the army, navy and air force by 44 percent next year to a record 139 billion rupees ($1.3 billion).

The island's cease-fire, brokered by Norway in 2002, helped bring about uninterrupted growth in the country's $24 billion economy. Gross domestic product expanded 6 percent in 2005.

International donors, led by the U.S., Japan, the European Union and Norway, have appealed to both sides to come to peace talks to prevent a resumption of war.

Rising Exports

Cabraal has said this year's projected growth rate of 8 percent is ''intact'' as the island also turns to exports to bolster the economy.

Sri Lanka's exports surged 25.6 percent to a record $734 million in August as the island shipped more tea, rubber and clothes. Exports fell 11.5 percent in October, according to latest central bank figures.

''The agriculture sector is also showing a slowdown, and with interest rates going up, growth will taper down further in the final quarter,'' said Rajive Dissanayake, research manager at HNB Stock Brokers Ltd. in Colombo.

Table of forecasts


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GDP
Forecaster YoY
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Median 7.0%
Average 7.0%
Number of Forecasts 5
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Commercial Bank of Ceylon 6.4%
HNB Stock Brokers 6.8%
John Keells Stock Brokers 7.0%
Lanka Orix Securities 7.5%
Unit Trust Management 7.5%
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LTTE was expecting a lump through PTOMS and Tsunami.

SC gave the boooot!

Umm LionDen your GoSL agreed to P-TOMS they signed it, and the International community backed it.

It was your supreme court that tore it down, so are you saying that in your democracy the supreme court is not independent of the government hehe ;)

get you facts straight before you try to argue in the big leagues boy.

No- interference in the internal affairs of Sri Lanka should be the foreign policy of all countries said Prime Minister Ratnasiri Wickremanayake. Sri Lanka is a sovereign country, dying of starvation is honourable than going begging to various institutions said the Prime Minister adding that certain countries are placing various conditions to make available aid pledged

Tourist arrivals fell 22.4 percent in November compared to a year ago, on the back of a 12 percent drop in October -- not an encouraging sign for a country dependent on tourist dollars and still recovering from the 2004 tsunami.

The debt service burden of the country is on the rise due to a host of factors and is causing implications.

It is estimated of the total US$ 935 million in foreign currency borrowing from domestic banks and local investors during 2004-5, about US$ 780 million will need to be repaid in 2006, according to International Monetary Fund (IMF) sources.

Was this really necessary? Feel like a big man now?

Alibaba and 40 theives. Why do they keep their hands like that? any idea?

But i know most tamils rent out containers to enter west. You parent too. You born in container when they were doing the PILGRIMAGE. Thats why you cant speak tamil! Can you?