Sri Lanka’s economy expands by 7.9% 1H06

September 12, 2006 (LBO) – Sri Lanka’s economy grew at a blistering pace of 7.9 percent for the six months to June the Central Bank governor said, aided by growth in manufacturing, services and agriculture produce. Analysts say reserve growth has tapered off since mid 2006, and the government has ratcheted up dollar borrowings to maintain reserves. “We are on track for at least 7.0 percent growth this year, or even more than that. This sets the tone for a higher 8.0 percent growth next year,” Governor Nivard Cabraal told visiting finance ministers from the Commonwealth countries during a business session.

A senior central banker said earlier that second quarter economic growth was estimated at 7.7 percent, after an 8.1 percent growth in the first quarter.

Economic expansion in this South Asian island has been growing apace as the country rebuilds infrastructure, houses and schools destroyed during the December 2004 tsunami.

The tsunami also brought benefits with an outpouring of aid from Sri Lankans living overseas and charities, which has helped prop up official foreign exchange reserves.

Cabraal said gross official reserves have climbed to 2,557 million dollars from Jan-Aug, over 2,458 million doll