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Thursday, November 01, 2012 - 06.20 GMT
Sri Lanka economy to grow 7.0-pct in 2013 - RAM Ratings


Sri Lanka's economic growth is likely to recover to 7.0 percent in 2013 after slowing to 6.5 percent in 2012, RAM Ratings said.

Global uncertainty and European troubles have dampened demand for exports and a drought has hit agriculture output and electricity generation this year, and tightening of monetary policy is also slowing credit.

But Chinese funded construction is expected to continue, driving economic activity.

Tourism in particular would be a growth sector with investments flowing in also from overseas.

"Domestic private consumption is anticipated to chart healthy growth due to the expansion of the general economy," RAM Ratings said in an economic outlook for 2013.

"Driven by continued support from the Chinese government, investment is expected to increase further, although regressive policies may pose a downside risk."

A slowing economy may hurt state revenues while rising interest rates may also expand the budget deficit, RAM said, though there were efforts to reduce the budget deficit.

"A pick-up in investment will boost construction, especially for civil infrastructure projects. The active financial and retail sectors should also lift the services sub-sector."

RAM said the rupee may appreciate unless external shocks worsen.






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Last modified: November 01, 2012.

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