Sri Lankas 2006 GDP growth best since 1978

Colombo, Mar 30 | Updated: Mar 31 2007, 05:30am hrs
Sri Lankas economy grew 7.4% in 2006, the islands highest growth rate since 1978, with telecoms and industry leading the way. The central bank had forecast growth of 7% for 2006 and the government was aiming for 8%. The economy expanded 5.9 % in 2005.

Despite a lot of challenges, we managed to get 7.4% economic growth, President Mahinda Rajapaksa told officials and the media on Friday as the central bank unveiled its 2006 annual report.

The economy needs to grow at 8% (a year) over the next five years to improve the living conditions of the people, added career politician Rajapaksa, who has kept the finance ministry portfolio for himself. Central Bank Governor Ajith Nivard Cabraal said the economy expanded 6.4 % in the fourth quarter of 2006 from a year earlier, slowing from 7.5% growth in the third quarter, and forecast full-year growth of 7.5% in 2007.

The central bank said growth in telecoms services helped drive economic expansion last year, along with industrial sectors such as textiles, food and beverages, plus construction work related to infrastructure projects. The Asian Development Bank warned this week that growth could slow to around 6.0 % a year over the next two years, citing the impact on tourism of renewed civil war between the state and Liberation Tigers of Tamil Eelam (LTTE) rebels plus the slow pace of structural reform. Dushyanth Wijayasinghe, head of research at Asia Securities in Colombo, had expected growth in 2006 of 6.8%.