Sri Lanka’s economy expands 8.1% first quarter: Central Bank

June 29, 2006 (LBO) – Sri Lanka's 24-billion dollar economy expanded by 8.1 percent during the first quarter of this year, ahead of a recent government forecast of 7.0 percent, the Central Bank said Thursday. The bank, which is forecasting a year-end growth of 7.0 percent said the economy would remain vulnerable an upsurge in violence, as sporadic attacks on military positions have left over 825 people dead since last December.

"The recent escalation of violence and resultant increased security measures would somewhat constrain economic activities, particularly agricultural production and tourism in vulnerable areas, while trading, transport, communication and distribution activities would be dampened," the bank said.

Economic expansion during the quarter under review largely came from growth in the services (63 percent), industrial (17 percent) agricultural (20 percent) sectors, as the country responded to a rise in consumption and investments during the post-tsunami period.

The bank said that gross domestic product (GDP) had expanded by 4.4 percent in the last three months of 2005 on a quarterly basis, as the country was still recovering from the December 2004 tsunami.

"Eight percent grow