Sri Lanka growth expected to slow in last quarter

Dec 17, 2008 (LBO) – Sri Lanka’s economic expansion is likely to slow in the last quarter as an external slowdown hits demand for its products, resulting in year-end growth of around 6.0 percent, officials said. In the third quarter the economy expanded by 6.3 percent, the government’s statistics office said, helped by high agricultural output, amid record prices.

“The global turmoil only began to affect us in the last two weeks of the third quarter, so the effects are not fully felt in this quarter,” director general of statistics Suranjana Vidyaratne said.

The rubber sector grew 14.8 percent (against 8.9 percent the same quarter in 2007), while paddy grew 50.5 percent in the third quarter against a contraction of 3.9 percent in 2007.

Growth in tea was slower at 1.4 percent. The agriculture sector as a whole grew 12.4 percent against 3.8 percent.

Commodity Bubble

Officials said a government policy emphasis on agriculture, including fertilizer subsidies, following a highlighting of low growth in earlier quarters, may have boosted the sector.

They seemed unaware that a boom in rubber, tea and even rice prices earlier in the year was a fallout from the global crisis, trigger