Sri Lanka’s economic growth slowed last quarter as a global recession reduced demand for the nation’s tea, rubber and textile exports.
Gross domestic product expanded 6.3 percent from a year earlier, compared with 7 percent in the three months ended June 30, the statistics department said in Colombo today. Economists were expecting growth of 6.1 percent.
Sri Lanka’s central bank is adding cash into the economy to drive down interest rates and stimulate consumer demand to support growth. The effort may be negated by a downgrade of the country’s credit ratings by Standard & Poor’s yesterday, which can increase borrowing costs.
“Growth in services and the industrial sector may remain sluggish if high interest rates prevail,” said Bimanee Meepagala, an analyst at Eagle NDB Fund Management Co. “The main growth driver would be agriculture, driven by the liberated regions” from the Tamil Tiger rebels.