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Sri Lanka expects 5-5.5-pct growth in 2017: Cen Bank Governor

ECONOMYNEXT – Sri Lanka’s economy should grow 5-5.5 percent this year, with rains anticipated soon, ending the severe drought that had crippled the agricultural sector last year, Central Bank Governor Indrajit Coomaraswamy said.

The growth momentum should remain despite this week’s hike in Central Bank policy interest rates, he told a news conference.

Growth slowed to a three-year low of 4.4 percent in 2016 from growth of 4.8 percent in 2015.

The Central Bank said that, despite adverse weather conditions and challenging global developments, an acceleration of growth was observed towards end-2016, with the last quarter of 2016 recording growth of 5.3 percent, partly supported by the base effect.

Agriculture-related activities contracted 4.2 percent in 2016, impacted by supply-side disruptions on account of floods in the second quarter and drought conditions during the final quarter of 2016.

Coomaraswamy said rainfall was expected to be back to normal by April or May, and that agriculture was expected to do better.

He said interest rates were raised to give a strong signal to stamp out inflationary expectations.

The rate hike should not have a big effect on lending rates because the market rates had already gone up, he added.
(COLOMBO, March 24, 2017)

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