Sri Lanka’s economy grows 7.4 percent in the third quarter

L to R: Samantha Ranatunga, Chairman, HVA Foods PLC; Jan Müggenburg, Chief Executive Officer, Müggenburg Group; Graham Stork, Chief Executive Officer, HVA Foods PLC; Sarva Ameresekere, Group Chairman, George Steuart & Co. Ltd.

December 13, 2006 (LBO) – Sri Lanka's economy grew 7.4 percent in the third quarter of this year, the island's Census and Statistics Department said Wednesday, but an escalation in hostilities could dampen future economic progress.

The department, which is the main agency that prepares the country's national accounts, said growth during the third quarter was largely driven by services and industrial sector.

Services contributed 58.2 percent to Gross Domestic Product (GDP), industries 28.2 percent and 13.6 percent from agriculture, during the third quarter of this year.

"We expect year-end gross domestic product to be around 7.4 percent, led by growth in telecommunications, ports, banks, industrial and agricultural services," Suranjana Vidyaratne, Director General of the Census & Statistics Dept., told reporters here.

Year end forecast for 2006, however, is a tad higher than the International Monetary Fund's expectations of 7.0 percent.

"The recent escalation of hostilities could pose a risk to future economic prospects," the IMF said in a recent statement following its review the island's performance in the first half of the year.

"The setbacks in the peace process, which have caused some weakening

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