Economy recovered rapidly -WB

Despite entering the global financial crisis in a weak macroeconomic situation, the Sri Lankan economy has recovered rapidly.

The latest World Bank (WB) report said that after contracting for two quarters (2008Q4 and 2009Q1), the economy began growing again in the second quarter of 2009. The rebound was aided by a post-war confidence-bounce, declining interest rates, expansionary fiscal policy, and large inflows of foreign capital into government securities as global financial markets thawed.

In 2009 fourth quarter growth reached 6.2 percent; foreign reserves went to about US $5 billion; inflation was in single-digits, though gradually creeping upward, and the current account deficit had declined to 0.5 percent of GDP, compared to 9.5 percent in 2008, as imports declined much faster than exports. Remittances continued to grow briskly, increasing by 14 percent in 2009, compared to 2008, report said.