| Date - Field | Sri Lanka - Economy - overview |
2012 January
Economy - overview | Sri Lanka is engaging in large-scale reconstruction and development projects following the end of the 26-year conflict with the LTTE, including increasing electricity access and rebuilding its road and rail network. Additionally, Sri Lanka seeks to reduce poverty by using a combination of state directed policies and private investment promotion to spur growth in disadvantaged areas, develop small and medium enterprises, and promote increased agriculture. High levels of government funding may be difficult, as the government already is faced with high debt interest payments, a bloated civil service, and historically high budget deficits. The 2008-09 global financial crisis and recession exposed Sri Lanka's economic vulnerabilities and nearly caused a balance of payments crisis, which was alleviated by a $2.6 billion IMF standby agreement in July 2009. The end of the civil war and the IMF loan, however, have largely restored investors' confidence, reflected in part by the Sri Lankan stock market's recognition as one of the best performing markets in the world. Sri Lankan growth rates averaged nearly 5% in during the war, but increased government spending on development and fighting the LTTE in the final years spurred GDP growth to around 6-7% per year in 2006-08. After experiencing 3.5% growth in 2009, Sri Lanka's economy is poised to achieve high growth rates in the postwar period. |
2011 January
Economy - overview | Sri Lanka is engaging in large-scale reconstruction and development projects following the end of the 26-year conflict with the LTTE, including increasing electricity access and rebuilding its road and rail network. Additionally, Sri Lanka seeks to reduce poverty by using a combination of state directed policies and private investment promotion to spur growth in disadvantaged areas, develop small and medium enterprises, and promote increased agriculture, High levels of government funding may be difficult, as the government already is faced with high debt interest payments, a bloated civil service, and historically high budget deficits. The 2008-09 global financial crisis and recession exposed Sri Lanka's economic vulnerabilities and nearly caused a balance of payments crisis, which was alleviated by a $2.6 billion IMF standby agreement in July 2009. The end of the civil war and the IMF loan, however, have largely restored investors' confidence, reflected in part by the Sri Lankan stock market's recognition as one of the best performing markets in the world. Sri Lankan growth rates averaged nearly 5% in during the war, but increased government spending on development and fighting the LTTE in the final years spurred GDP growth to around 6-7% per year in 2006-08. After experiencing 3.5% growth in 2009, Sri Lanka's economy is poised to achieve high growth rates in the postwar period. |
2010 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for more market-oriented policies, export-oriented trade, and encouragement of foreign investment. Recent changes in government, however, have brought some policy reversals. Currently, the ruling Sri Lanka Freedom Party has a more statist economic approach, which seeks to reduce poverty by steering investment to disadvantaged areas, developing small and medium enterprises, promoting agriculture, and expanding the already enormous civil service. The government has halted privatizations. Although suffering a brutal civil war that began in 1983, Sri Lanka saw GDP growth average 4.5% in the last 10 years with the exception of a recession in 2001. In late December 2004, a major tsunami took about 31,000 lives, left more than 6,300 missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property. Government spending on development and fighting the LTTE drove GDP growth to about 7% per year in 2006-07 before the global recession slow growth in 2008, but high government spending and high oil and commodity prices also raised inflation to around 15% in 2008. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, port construction, telecommunications, and insurance and banking. In 2008, plantation crops made up only about 20% of exports (compared with more than 90% in 1970), while textiles and garments accounted for more than 40%. About 1.5 million Sri Lankans work abroad, 90% of them in the Middle East. They send home more than $2.5 billion a year. The 25-year civil conflict between LTTE and the government of Sri Lanka has been a serious impediment to economic activities. By mid February 2009, the LTTE remained in control of small and shrinking area in the North. The conflict continues to cast a shadow over the economy. |
2009 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for more market-oriented policies, export-oriented trade, and encouragement of foreign investment. Recent changes in government, however, have brought some policy reversals. Currently, the ruling Sri Lanka Freedom Party has a more statist economic approach, which seeks to reduce poverty by steering investment to disadvantaged areas, developing small and medium enterprises, promoting agriculture, and expanding the already enormous civil service. The government has halted privatizations. Although suffering a brutal civil war that began in 1983, Sri Lanka saw GDP growth average 4.5% in the last 10 years with the exception of a recession in 2001. In late December 2004, a major tsunami took about 31,000 lives, left more than 6,300 missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property. Government spending on development and fighting the LTTE drove growth to about 7% per year in 2006-08, but high government spending and a loose monetary policy also pushed inflation past 20% in 2008. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, port construction, telecommunications, and insurance and banking. In 2006, plantation crops made up only about 15% of exports (compared with more than 90% in 1970), while textiles and garments accounted for more than 60%. About 800,000 Sri Lankans work abroad, 90% of them in the Middle East. They send home more than $1 billion a year. The struggle by the Tamil Tigers of the north and east for an independent homeland continues to cast a shadow over the economy. |
2008 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for more market-oriented policies, export-oriented trade, and encouragement of foreign investment. Recent changes in government, however, have brought some policy reversals. Currently, the ruling Sri Lanka Freedom Party has a more statist economic approach, which seeks to reduce poverty by steering investment to disadvantaged areas, developing small and medium enterprises, promoting agriculture, and expanding the already enormous civil service. The government has halted privatizations. Although suffering a brutal civil war that began in 1983, Sri Lanka saw GDP growth average 4.5% in the last 10 years with the exception of a recession in 2001. In late December 2004, a major tsunami took about 31,000 lives, left more than 6,300 missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property. Government spending and reconstruction drove growth to more than 7% in 2006 but reduced agriculture output probably slowed growth to about 6 percent in 2007. Government spending and lose monetary policy drove inflation to 16% in 2007. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, port construction, telecommunications, and insurance and banking. In 2006, plantation crops made up only about 15% of exports (compared with more than 90% in 1970), while textiles and garments accounted for more than 60%. About 800,000 Sri Lankans work abroad, 90% of them in the Middle East. They send home more than $1 billion a year. The struggle by the Tamil Tigers of the north and east for an independent homeland continues to cast a shadow over the economy. |
2007 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In 2003, plantation crops made up only 15% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of about 5.5% in the 1990s, but 2001 saw the first contraction in the country's history, by 1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 5% between 2002 and 2006. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. The struggle by the Tamil Tigers of the north and east for a largely independent homeland continues to cast a shadow over the economy. In late December 2004, a major tsunami took about 31,000 lives, left more than 6,300 missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property. |
2006 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In 2003, plantation crops made up only 15% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-2000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, -1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 4.0% in 2002 and to 5.2% in both 2003 and 2004. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. The struggle by the Tamil Tigers of the north and east for a largely independent homeland continues to cast a shadow over the economy. In late December 2004, a major tsunami took nearly 40,000 lives in Sri Lanka and caused massive destruction of property. |
2005 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In 2003, plantation crops made up only 15% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-2000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, -1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 4.0% in 2002 and to 5.2% in both 2003 and 2004. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. The struggle by the Tamil Tigers of the north and east for a largely independent homeland continues to cast a shadow over the economy. In late December 2004, a major tsunami took nearly 40,000 lives in Sri Lanka and caused massive destruction of property. |
2004 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In 2003, plantation crops made up only 15% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-2000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, -1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 4.0% in 2002 and 5.2% in 2003. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. The struggle by the Tamil Tigers of the north and east for a largely independent homeland continues to cast a shadow over the economy. |
2003 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-2000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, -1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 3.2% in 2002. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. |
2002 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-2000 with average growth of 5.3%. But 2001 saw the first contraction in the country's history, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. |
2001 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an annual average rate of 5.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-98 with growth of 6.4% and 4.7% - but slowed to 4.3% in 1999. Growth increased to 5.6% in 2000, with growth in tourism and exports leading the way. But a resurgence of civil war between the Sinhalese and the minority Tamils and a possible slowdown in tourism dampen prospects for 2001. For the next round of reforms, the central bank of Sri Lanka recommends that Colombo expand market mechanisms in nonplantation agriculture, dismantle the government's monopoly on wheat imports, and promote more competition in the financial sector. |
2000 January
Economy - overview | In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade. Sri Lanka's most dynamic industries now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an annual average rate of 5.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997-98 with growth of 6.4% and 4.7% - but slowed to 3.7% in 1999. For the next round of reforms, the central bank of Sri Lanka recommends that Colombo expand market mechanisms in nonplantation agriculture, dismantle the government's monopoly on wheat imports, and promote more competition in the financial sector. A continuing cloud over the economy is the fighting between the Sinhalese and the minority Tamils, which has cost 50,000 lives in the past 15 years. |
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This page was last updated on 7 February, 2012 |
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