Sri Lanka economy booms despite bombs and bloodshed

COLOMBO, Aug 18, 2006 (AFP) – Sri Lanka is expected to record its highest annual economic growth in 28 years despite escalating violence in the decades-old separatist conflict, analysts said.

Security has deteriorated since December with aerial bombings, artillery attacks, suicide bombings and fierce face-to-face confrontations that have officially claimed at least 1,500 lives.

However, the 24-billion-dollar economy is booming, analysts said, with a staggering 8.1 percent growth in the first three months of this year and forecasts of 8.0 percent for the full year, the best since 1978.

Treasury Secretary P.B. Jayasundara said growth was expected to be more than 7.0 percent in the second quarter of this year.

The growth has been fuelled by the successful garment industry which has cornered a niche market for exotic lingerie, as well as farm exports.

Hotels and roads built after the December 2004 tsunami have also helped, the Central Bank of Sri Lanka has said.

Media minister Anura Yapa said tourism was also assisting, with hotels reporting solid bookings as holidaymakers shrug off concerns of violence and terrorism and continue to travel.

“Hotels in Colom