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Sri Lanka economy expands post-war

[AFP, Friday, 18 December 2009 10:52 No Comment]

Sri Lanka’s economic growth accelerated at its fastest pace this year after the end of a bloody ethnic civil war in May, helped by new investment, official data released Friday showed.

The economy grew by 4.2 percent during the third quarter to September, faster than the 2.1 percent growth it posted in the second quarter.

"Peace is a key factor that drove the economy during this quarter," deputy statistics director Nalini Kumarasinghe told reporters, adding that lower interest rates also helped propel investment.

Analysts expect the economy to gain pace, fuelled by reconstruction of the war-battered country’s infrastructure, after government forces crushed the separatist Tamil Tiger rebels in May, ending 37 years of ethnic conflict.

But the island’s economy was still feeling the effects of the global financial crisis and a poor monsoon, officials said.

The island’s expansion was down sharply from the 6.3 percent growth the economy logged in the same period a year earlier.

Sri Lanka’s central bank is forecasting economic growth for 2009 of 4.5 percent, after expansion of six percent last year. For 2010, the central bank is hoping that growth will return to six percent.

"The stock market and hotels sector improved and investment sentiment improved during the quarter," Kumarasinghe said.

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