Sri Lanka Gross Domestic Product growth below forecast

Sri Lanka’s economy grew a weaker-than-expected 7.3 percent last year, the Central Bank said yesterday as it kept interest rates at multi-year lows as it looks to boost private investment and lending.

The Central Bank of Sri Lanka said last year’s expansion was much stronger than the 6.3 percent recorded in 2012 thanks to a pick-up in exports and foreign remittances.

However, the figure was below the bank’s 8.0 percent forecast as an expected rise in lending had not taken place.

“Credit to the private sector by commercial banks moderated, growing only by 5.2 per cent in January 2014 in comparison to 7.5 per cent in December 2013,” the bank said in its monthly review of the economy.

Officials said the softer data came as loans to the private sector rose just 15.5 percent last year, well short of estimates of 18 percent.

But the bank said its Monetary Board viewed the deceleration in those loans to be “temporary”.

It added: “Private sector credit is likely to rebound from the second quarter of (2014), supported by declining market lending rates, sufficient liquidity levels and increased demand for exports from the advanced economies.”The bank kept rates on hold yesterday after cutting them by 50 basis points to 8.0 percent in January -- the lowest since it began publishing them in 1999 -- as it looks to boost private-sector lending.