Sri Lanka’s central bank keeps 7.5 percent growth forecast; halts release of GDP numbers

June 30, 2007 (LBO) – Sri Lanka’s economy would still grow by 7.5 percent this year despite first quarter growth sliding to 6.1 percent, the Central Bank has said, while a rising budget deficit pushed interest rates to new highs. Analysts also say a slowdown in reported growth numbers is inevitable partly because of statistical effects of a spike in growth and inflation last year, as well as a real slowdown in economic activity.

In the first quarter of 2006, the economy expanded by 7.9 percent.

Updated The bank said Friday it has stopped releasing its own gross domestic product numbers and would now go by the numbers of the national statistics office to avoid confusion created by two sets of growth numbers.

While keeping its original growth forecast the bank said it would closely watch trends in the coming months following a slowdown in agriculture.

Critical Review

“The Central Bank will closely monitor the growth figures and trends in the 2nd and
3rd quarters in order to critically review the possible achievement of the projected growth targets,” the bank said in a watered down two-page narrative which contrasted sharply with its earlier detailed analysis of the economy issued every