Archives

Peace process sparks economic recovery

by Channa Kasturisinghe

Sri Lanka's economy is showing signs of recovery with a 2.5 per cent growth in the Gross Domestic Product (GDP) during the second quarter of this year.

The Central Bank of Sri Lanka (CBSL) has described this positive performance as a tangible sign of the economic benefits of the MOU between the Government and the LTTE.

The growth although modest was commendable considering the difficulties, which continued from 2001 and when compared with the consecutive negative growth rates during the last three quarters of the previous year and the minimal growth recorded during the first quarter of 2002.

Central Bank Deputy Governor W.A Wijewardane said the economy grew by 1.4 per cent during the first half of the year.

The economy grew by only 0.9 per cent during the corresponding period of 2001. The CBSL estimated that agriculture and services sectors grew by 3.7 per cent and 3.9 per cent. The industrial sector contracted by 1.1 per cent.

Wijewardane said the second quarter performance suggested "a resurgence of overall economic activity" for the rest of the year. A moderate growth of three per cent was projected for 2002.

Normal weather, uninterrupted power supply, recovery in exports, improved external trade, tourism and port activities, integrated trade and transport activities and restored investor confidence will be the major components of this revival. This projection bears both upward and downward risks.

A sluggish global economy could jeopardise the expected recovery in industry and the export of services. Political rivalry between the Executive and Parliament has also created uncertainty which could negatively impact the economy.

A successful peace process will enhance business confidence, investment and the total output of the economy, Wijewardane said.

The improved performance of the agriculture sector has been attributed to normal weather. Tea production alone grew by 10 per cent.

Banking, insurance and real estate recorded the highest growth of seven per cent. Transport, storage and communications sector grew by 5.9 per cent during the second quarter of 2002. The transport sector also performed well with the rise in goods and passenger transport to the North-East after the ceasefire. The CBSL is concerned over the contraction in the industrial sector which influences the services sector.

News | Business | Features | Editorial | Security
Politics | World | Letters | Sports | Obituaries |

Produced by Lake House
Copyright 2001 The Associated Newspapers of Ceylon Ltd.
Comments and suggestions to :Web Manager