GROWTH MOMENTUM TO BE MAINTAINED IN 2H2013 WITH GLOBAL RECOVERY Lankan economy on track for 7.5 per cent growth, says CB

The Central Bank ( CB) has said Sri Lanka’s economy is on track for targeted 7.5 per cent by end 2013 following two successful quarters.

In a review of the economy, the CB said in a statement that the economy grew by 6.8 per cent in the second quarter of 2013 according to the GDP estimates published by the Department of Census and Statistics.

Both industry and services sectors contributed positively towards growth while the agriculture sector contracted. The industry sector maintained its growth momentum registering an expansion of 10.1 per cent and this was supported by growth in construction, manufacturing, mining and quarrying and electricity, gas and water sub sectors. “The expansion of 6.6 per cent in the services secthe year with the anticipated retor emanated mainly from the covery in the global economy. wholesale and retail trade and The recovery in the global econtransport and communication sub omy is likely to generate a healthy sectors. The growth in the wholedemand for exports while supportsale and retail trade sub sector ing growth in the tourism induswas supportedtry.by both the expansion in external and domestic Together with the improved extrade activities. However, the agriternal demand, domestic demand culture sector contracted by 1.1 is also expected to rise with enper cent mainly due to the drop in hanced purchasing power impactcoconut and rubber production ing favourably on the manufacturwith adverse weather conditions ing sub sector. Meanwhile, trade, while domestic agricultural crops transport and financial services such as paddy and other food would also expand in tandem durcrops recorded lower than expecing the second half of the year ted output,” the statement said. with further expansion in the

With this second quarter manufacturing sector, it said. growth, the economy achieved a “The banking, real estate and 6.3 per cent growth in the first half insurance activities sub sector of 2013, the CB added, noting that would benefit from relaxed monethe growth momentum is expected tary policy measures introduced to accelerate in the second half of from end 2012. The recent growth

“The expansion of 6.6 per cent in the services sector emanated mainly from the wholesale and retail trade and transport and communication sub sectors. The growth in the wholesale and retail trade sub sector was supported by both the expansion in external and domestic trade activities. However, the agriculture sector contracted by 1.1 per cent mainly due to the drop in coconut and rubber production with adverse weather conditions while domestic agricultural crops such as paddy and other food crops recorded lower than expected output,” the statement said.

momentum seen in the construction sector is also expected to continue during the second half of the year supported by the infrastructure development drive in the country,” the statement said.

The recovery in the Yala harvest of agricultural products from the drought affected harvest of the previous year is also expected to augment growth. Further, the expected growth in private sector credit from commercial banks would also provide a stimulus to economic activities. In addition, as seen in the recent past the private sector could access alternative sources of finance, such as non- bank credit, debenture issues and funds from international capi- tal markets, further strengthening the growth momentum.

“With these anticipated developments in the external sector and domestic economy, the projected growth of 7.5 per cent for 2013 is likely to be realized, thereby moving the economy towards its potential growth path in the medium term,” a confident CB said.