Bloomberg News

Sri Lanka Lowers 2011 Growth Forecast, Says Rates Sufficient

October 06, 2011

Oct. 6 (Bloomberg) -- Sri Lanka’s economy may grow about 8.3 percent in 2011, less than an earlier forecast of 8.5 percent, due to a decline in agricultural activity in the first quarter, the central bank’s deputy governor said.

The inflation rate will likely fall to less than 6 percent by December and the central bank won’t immediately cut benchmark interest rates, Dharma Dheerasinghe said in Colombo today.

“We think the current monetary stance is sufficient,” he said. “Unless we see some extraordinary development we will continue with this policy.”

Sri Lanka’s inflation slowed to a one-year low in September, as increased food supplies and a 0.7 percent rise in the local currency against the dollar so far this year helped curb price gains. Central Bank Governor Ajith Nivard Cabraal has left borrowing costs unchanged since January to support growth as the global recovery weakens.

The bank will announce its October monetary policy review on Monday.

Growth in the $50 billion economy accelerated to 8.2 percent in the three months through June, compared with a 7.9 percent pace in the first quarter. The value of Sri Lanka’s agricultural output expanded 1.9 percent in the three months through June, after shrinking 5.1 percent in the previous quarter as floods destroyed crops.

Consumer prices in the capital, Colombo, increased 6.4 percent in September from a year earlier after gaining 7 percent in August, the Department of Census and Statistics said Sept. 30.

--Editors: Alan Soughley, Stephanie Phang

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To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net


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