Sri Lanka growth slows to 1.8 percent in first half
AFP/File –

Sri Lankan workers pack tea at a factory on the outskirts of Colombo in August 2009. Sri Lanka’s …
Mon Sep 14, 4:51 am ET

COLOMBO (AFP) – Sri Lanka’s economy grew 1.8 percent year on year in the first half of 2009, dragged down by weak demand for clothing and tea, official data showed Monday.

The figure contrasted with 6.6 percent expansion in the first half of 2008, but analysts expect an economic revival after government forces crushed the Tamil Tiger rebels in May following nearly four decades of conflict.

“The impact of the global downturn reduced demand for our exports and resulted in this reversal,” deputy director of the Department of Census and Statistics, Nalini Kumarasinghe, told reporters.

The war-battered economy slowed to 2.1 percent in the second quarter, from 7.0 percent in the same period a year earlier, as the services sector including banks, shipping and telecom were slow to recover.

The sector slowed to 1.1 percent in the second quarter compared to 6.5 percent at the same point last year.

Agriculture grew 4.4 percent, from 7.4 percent the previous year, while industrial output expanded 3.0 percent, against 6.9 percent a year earlier.

Sri Lanka’s central bank has raised year-end economic targets to between four and five percent, from 2.5 percent to 3.0 percent, after the Tigers were defeated.

“We expect full year 2009 forecast to be around 4.5 percent, driven by economic activity in construction, trade and tourism,” said Yohan Seimon, an analyst at John Keells Stockbrokers.

Sri Lanka’s economy posted 6.0-percent growth in 2008, down from 6.8 percent in 2007.