Central Bank Governor A.S. Jayawardane yesterday forecasted a 5% growth in the economy this year. The Daily Mirror said that Mr. Jayawardane was also puzzled by the current pessimism of the business community despite strong economic fundamentals. "We have ensured macro economic stability. Inflation at 4%is at its lowest levels, interest rates are stable and declining, unemployment is down, export performance is improving. The economy is fundamentally sound and stable despite internal and external constraints and I find it difficult to understand the pessimism in certain sections of the business community" Mr. Jayawardane told the Daily Mirror.

     He has also said that the 4% economic growth in 1999 was a commendable achievement amidst constraints in hostile global economic environment although people may say that this growth is low. Economic growth in 2000 is expected to be based on the continuous resurgence in agriculture, better performance by industrial sector through enhanced productivity and competitiveness and a buoyant service sector. Government revenue have grown by over 10% upto September last year and is expected to pickup with higher contribution from the Goods and Services Tax (GST).

     Economy is expected to grow faster this year unless some unforeseen disaster happens to effect the economy. Independent observers have been confused by the pessimistic nature of the business community. According to some analysts business confidence have become low due to terrorist strikes, political atmosphere in the past few weeks and the delay in the expected economic recovery. However, these independent observers said that the business sector should take strength from the fact that the macro-economic stability and the private should go ahead in improving their businesses and overcoming market challenges irrespective of political instability. They also expect corporate earnings to improve towards March 2000 due to revival tea prices, strong tourism sector performance, better export competitiveness and gradual recovery by the global economy.

     However, the Central Bank addressing the structural weaknesses in the Government savings and the need to accelerate private investments said that structural reform agenda by the Government upto last year and their progress had been commendable.

     Central Bank sources also told the Daily Mirror that the economy in 2000 would depend largely on the developments of the external sector.

Contact Information: Send mail to webmaster@priu.gov.lk with questions or comments about this web site. Last modified: September 25, 2003.