Economy of Sri Lanka

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Economy of Sri Lanka

Sri Lanka 50 Rupees Currency Sri Lankan rupee (LKR) Calendar year SAFTA, WTO

Fiscal year Trade organisations

Statistics GDP GDP growth GDP per capita GDP by sector $53,241 billion (2010 IMF est.) 8.2% (2010)/ 9.5% (2011 est.) $5,300 (2010 est.) agriculture: 12.8%; industry: 29.2%; services: 58% (2009 est.) Inflation (CPI) Population below poverty line Gini index 49 (2007) 3.4% (2009 est.) 7.6% (2010 est.)

fish Main export partners United States 22. Belgium 4.) Labour force by occupation Unemployment agriculture: 32.8% (2008) .8%. petroleum.5%.7%. construction Ease of Doing Business Rank 102nd[2] External Exports Export goods $7 billion (2009 est. China 12.1%.7%. telecommunications. insurance. foodstuffs. United Kingdom 12. information technology services. cement.1%.4%. tea and spices.6 billion (2009 est.3%. shipping. diamonds.9%.Labour force 8. Iran 7. machinery and transportation equipment Main import partners India 18.9%. mineral products. petroleum refining. Germany 5. South Korea 4. rubies. India 4.) textile fabrics. banking. Italy 4.) textiles and apparel. clothing. coconuts. coconut products. emeralds. industry: 26.5% (2008) Imports Import goods $9. rubber manufactures. tourism.) 3. textiles. tea.4% (12 month moving average as of December 2009) [1] Main industries processing of rubber. tobacco and other agricultural commodities. services: 41% (December 2008 est.1 million note: excludes northern and eastern provinces (2009 est.2%. Singapore 7.

most of them from the middle-east.300 (PPP). the 1987-89 and the 1983-2009 civil war. are in US dollars With an economy of $53. tea export. textile. veering between left and right wing economic practices. overseas employment contributes highly in foreign exchange. The main economic sectors of the country are tourism. rice production and other agricultural products.241 billion (2010 IMF estimate) ($104. Sri Lanka has mostly had strong growth rates in recent years.) Main data source: CIA World Fact Book All values. Both of these parties applied pro-right policies. The parties which ruled the country after 1948 did not implement any national plan or policy on the economy. After 2004 the UPFA government has concentrated on mass production of goods for domestic consumption such as rice.124 billion PPP estimate). [3] and a per capita GDP of about $5.) $6. unless otherwise stated.[4] Contents [hide] .) Public finances Public debt Revenues Expenses Economic aid Foreign reserves 82. such as the 1971. with debt reaching 101% of GDP.) $808 million (2006) $5. The impending currency crisis was averted after the country reached a hasty ceasefire agreement with the LTTE and brokered substantial foreign loans. Since becoming independent from Britain in February 1948.45 billion (31 December 2009 est. In addition to these economic sectors. India and Pakistan. In 2001.9% of GDP (2009 est. apparel. Between 1977 and 1994 the country came under UNP rule and between 1994 and 2004 under SLFP rule.) $9. grain and other agricultural products. the economy of the country has been affected by natural disasters such as the 2004 Indian Ocean earthquake and a number of insurrections.Gross external debt $19.801 billion (2009 est. And is far ahead of its other core south Asian peers such as Bangladesh.224 billion (2009 est.2 billion (30 November 2009 est. Sri Lanka faced bankruptcy. The government during 1970-77 period applied pro-left economic policies and practices.

deregulation. average annual GDP growth was 5. Economic growth has been uneven in the ensuing years as the economy faced a multitude of global and domestic economic and political challenges. Following the quelling of the JVP.1%). the government has been deregulating. especially the second in the late 1980s. Overall.2 Tea industry o 6. result of universal education policies. retains her vaunted high human development index with widespread and near total literacy rate (90.2% over 1991-2000.1 Tourism o 6. which saw the election of a more pro-capitalism party to Parliament (while the socialist leaning Sri Lanka Freedom Party retained the Presidency). The crises exposed the fundamental policy failures and structural imbalances in the economy and the need for bold reforms. and the political group Janatha Vimukthi Peramuna (JVP) uprisings. Early signs . The year ended in parliamentary elections in December. increased privatization. and a stress on exportoriented growth helped revive the economy's performance. The economy was hit by a series of global and domestic economic problems and affected by terrorist attacks in Sri Lanka and the United States.3 Apparel and textile industry o 6. and private sector development.4%-the first contraction since independence. widespread health delivery. In 2002.y y y y y y y y y y 1 Economic history 2 Labour 3 Macro-economic trend 4 Financial institutions 5 Economic infrastructure and resources o 5. reform. In 2001.2 Foreign assistance 8 See also 9 References 10 External links [edit] Economic history Sri Lanka began to shift away from a socialist orientation in 1977. taking GDP growth to 7% in 1993. GDP growth was negative 1.2 Energy 6 Economic sectors o 6.[5] The Mahinda Rajapakse government stopped the privatization process and indeed launched sveral new ones (Mihin Air). Still. low infant mortality (one of the lowest in the region). however.4 Agriculture 7 Global economic relations o 7. also caused extensive upheavals. Sri Lanka commenced a gradual recovery. The government of Prime Minister Ranil Wickremasinghe of the United National Party has indicated a strong commitment to economic and social sector reforms. It has 555 government funded hospitals. Since then. and opening the economy to international competition. diversification and liberalization. Sri Lanka.1 Transportation and roads o 5. privatizing. Twenty five years of civil war has no doubt slowed economic growth [2].1 Credit Rating and Commercial Borrowing o 7.

Conference of Public Sector Independent Trade Unions.[3][4]. Sri Lanka has also accumulated a 9. Trade union membership is on the decline. it also has begun a youth corps program to provide employment skills to the unemployed. The CWC's agenda includes political issues. economic growth bounced up to 4%. helped by strong service sector growth. Ceylon Federation of Trade Unions. Total FDI inflows during 2002 were about $246 million and are expected to exceed $300 million in 2003. The increased violence and lawlessness also prompted some donor countries to cut back on aid to the country.650 registered trade unions. Ceylon Bank Employees Union. Good progress was made under the Stand By Arrangement. In 2002. [edit] Macro-economic trend This is a chart of trend of gross domestic product of Sri Lanka at market prices [7] by the International Monetary Fund with figures in millions of Sri Lankan Rupees. the economy has benefited from lower interest rates. In addition.of a peace dividend were visible throughout the economy²Sri Lanka has been able to reduce defense expenditures and begin to focus on getting its large. which was resumed by the International Monetary Fund (IMF). Jathika Sevaka Sangayama.53 Sri Lankan Rupees . [6] [edit] Labour More than 20% of the 6. public sector debt under control. remains proportionally higher than the rate for less-educated workers. The government was able to exert fiscal control. Agriculture staged a partial recovery.1 million-strong labor force. a recovery in domestic demand. Union of Post and Telecommunication Officers. These measures. and the JVP-aligned Inter-Company Trade Union.2 % deficit and the central bank has not intervened since late 2006 to print more currency [5]. a revival of the stock exchange. A sharp rise in world petroleum prices combined with fallout from the civil war has led to inflation hitting 20%. The largest share of FDI has been in the services sector. have helped restore investor confidence and created conditions for the government to embark on extensive economic and fiscal reforms and seek donor support for a poverty reduction and growth strategy. The unemployment rate has declined in recent years and hovers at 10%. The government has embarked on educational reforms it hopes will lead to better preparation of students and fewer mismatches between graduates and jobs. however. is unionized. The Ceylon Workers Congress (CWC) and Lanka Jathika estate workers union are the two largest unions representing workers in the heavily unionized plantation sector. At present Agriculture in Sri Lanka needs keen attention as it directed towards disastorus situation. Industrial sector growth. and inflation trended down. The president of the CWC also is Minister of Livestock Development and Estate Infrastructure. and 19 federations. However. the resumption of the civil-war in 2005 led to a steep increase defence expenditures.167 16. together with peaceful conditions in the country. Sri Lanka Nidhahas Sevaka Sangamaya. faltered for the second consecutive year due to weak demand and lower prices for Sri Lanka's exports. increased tourist arrivals. and increased foreign direct investment (FDI). The rate of unemployment among high school and college graduates. Many unions have political affiliations. however. Year Gross Domestic Product US Dollar Exchange 1980 66. There are more than 1. many of which have 50 or fewer members. Some of the stronger and more influential trade unions include the Ceylon Mercantile Union. excluding the north and east. In addition.

the CSE was the best performing stock exchange in the world. Sri Lanka's most dynamic industries now are food processing. Matara.52 Sri Lankan Rupees For purchasing power parity comparisons. with several new state enterprises launched.1985 1990 1995 2000 2005 162. It is one of the most modern exchanges in South Asia. The Colombo Stock Exchange (CSE) is the main stock exchange in Sri Lanka. and insurance and banking.20 Sri Lankan Rupees 40.4% and 4. In 1977. dismantle the government's monopoly on wheat imports. after the 30 years long civil war came to an end.000 lives in the past 15 years.772 1. The Central Bank is responsible for the conduct of monetary policy in the country and also has the supervisory powers over the financial system.25 Sri Lankan Rupees 77.[9] In 2009.7% in 1999.669 27. while textiles and garments accounted for 63%. which has cost 65. food and beverages. For the next round of reforms.06 Sri Lankan Rupees 51.00 Sri Lankan Rupees 100. Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export-oriented trade.[8] The current chairman of the Central Bank is Ajith Nivard Cabraal.7% .8% in 1996. By 1996 plantation crops made up only 20% of exports (compared with 93% in 1970). [edit] Financial institutions The Central Bank of Sri Lanka is the monetary authority of Sri Lanka and was established in 1950.375 321.363.but slowed to 3. A continuing cloud over the economy is the fighting between the Government of Sri Lanka and the LTTE. The headquarters of the CSE have been located at the World Trade Center Towers [6] in Colombo since 1995 and it also has branches across the country in Kandy. Privataization of such enterprises has stopped and reversed. textiles and apparel. Government provides employment for 13% of the work force and follows state enterprise oriented policies.257. See also: Central Bank of Sri Lanka and Colombo Stock Exchange [edit] Economic infrastructure and resources [edit] Transportation and roads . providing a fully automated trading platform.637 2.784 667. The economy rebounded in 1997-98 with growth of 6. GDP grew at an annual average rate of 5. the central bank of Sri Lanka recommends that Colombo expand market mechanisms in nonplantation agriculture. and promote more competition in the financial sector.5% throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3. Negombo and Jaffna. telecommunications. the US Dollar is exchanged at 113.4 Sri Lankan Rupees only. The vision of the CSE is to contribute to the wealth of the nation by creating value through securities. Kurunegala.

while the production and retailing of electricity i carried out by the Ceylon Electricity Board. c [edi E [edit] Tourism Unawatuna Beach.[10][11] The Sri Lankan Government (GOSL) and many individual "green groups" in Sri Lanka have been focusing on eco-friendly solutions to energy development and the country is undergoing changes to enforces stricter environmental policies in industries.Mai arti l Transport in Sri Lanka M t i iti t t t i ti l il t C l tB i t ti li i t il t i i i t i t t ti l R il C B l l l i R il i t i i li i ti t i t li t t l l t t ll t i j it t i lt t t C l t t l j t ll l i l i l i li ti t i t i " i l ll il t l i l i t R il t t t i i l li i t ll ll ll i l i C l t C l t i it t i i i t l i it t t i l ll t i l i [edi E ergy The energy poli y i governed by the Mini try of Power and Energy. one of the finest tourist destination in southern coast. both publi and private. Main arti l Tourism in Sri Lanka £¢ ¡ ¦¥ ¤   ti t Ci "R t t i i i li t il t t i t i lt l i t t t t t j t t l il i j t li i it l i ll C l ti t t it " R i l tt tt l ti i t t i t i l t i l l l i i t ti i i i l t i i t t i t "B t t iti t it l it i i " " i sectors . Energy in the country i mostly generated by hydro power stations in Central Province.

Major tourist attractions are focused around the islands famous beaches located in thesouthern and eastern (e. The 2004 Indian Ocean Tsunami[15] and the past civil war have reduced the tourist arrivals. It is reckoned that such projects could reduce rural poverty. the British planter who arrived in 1852. Main arti l T a industry of Sri Lanka The tea i dustry (operating under the Ministry of Public Estate Management and Development) is one of the main foreign exchange gaining industry in Sri Lanka also became the world's leading exporter in 1995 shared 23% of the total export higher thanKenya shared 22%.[14] The visiting tourists in areas where precious stones are available can visit Adam's Peak. [edit] Tea i dustry Tea estate in central highlands. The central highlands of the country. annual rainfall and the level of humidity are more favorable geographical factors for production in high quality tea.Tourism is one of the main industries in Sri Lanka.[18] Recently.[16] March 2008 by 8. [19] [20] [edit] Apparel and textile industry Main arti l The apparel industry of the country which producing high quality ready made garments and the main exporters are USA and Europe. There are about 900 factories throughout country serves world's leading fashion designing companies like Victoria's Secret. Sinharaja Forest Reserve. however the International media reports published about the improvements in industry of January 2008 by 0.6%. Li Claiborne and Tommy Hilfiger. as rubies and sapphires frequently found in Ratnapura and its surrounding areas also a major tourist attraction in the country.[21] ¨ ©¨ §    pparel industry of Sri Lanka . The industry was introduced to the country in 1867 byJames Taylor. ancient heritage sites located in the interior of the country and lush green [12][13] Also the precious stones such resorts located in the mountainous regions of the country.g. low temperature climate throughout the year. Pasi Kuda) parts of the country.6%[17] when comparing to last year's (2007) figures. Udawalawe National Park and Kitulgala (place of "The Bridge on the River Kwai" was filmed) as well. Sri Lanka has become one of the countries exporting fair trade tea to the UK and other countries.

exports amounted to $218 million in 2002.5 billion.8 billion in 2002. The most significant of these resulted from an aid conference in Tokyo in June 2003. transfers to loss-making state enterprises. In 2009. exports to Sri Lanka at $166 million in 2002. Ranil Wickremasinghe has warned that such intense borrowing is unsustainable and will not repay these loans once elected to power [11]. This will ease the congestion in Sri Lankan ports. Taiwan. four grades below investment grade. Singapore. Japan.S. it is mainly focusing on export market rather than domestic use in the country.S. according to Central Bank trade data²U. [edit] Foreign assistance Sri Lanka is highly dependent on foreign assistance. Japan. which included representatives from the International Monetary Fund. or 38% of total exports. were valued at $1. Standard and Poor's has rated Sri Lanka a "B+" speculative rating.[22] Ganja or cannabis is mostly grown for the needs of Ayurveda. coconut and grain also a part of the culture since 2500 years. was its fourth-largest in 2002 with exports of $355 million. Other leading suppliers include Hong Kong. The United States is the 10th-largest supplier to Sri Lanka. the United States has been Sri Lanka's biggest market for garments. the European Union and the United States totaled $4. .S. India is Sri Lanka's largest supplier. a bloated public sector. Sri Lanka's most important market. [edit] Global economic relations Exports to the United States. traditionally Sri Lanka's largest supplier. Wheat accounted for 14% of U. pledges at the summit. the indigenous medicine of Sri Lanka. World Bank. Standard and Poor's estimates public sector debt has reached 95 % of GDP [8]. For many years. The head of the opposition UNP. with exports of $835 million in 2002. and South Korea. taking more than 63% of the country's total garment exports. down from the previous year. Asian Development Bank. particularly in Colombo. A brand new port is being built in Hambantota in South Sri Lanka by the Chinese government as a part of the massive Chinese aid to Sri Lanka.[edit] Agriculture Main articles: Agriculture in Sri Lanka and Livestock in Sri Lanka The agricultural sector of the country which producing domestic consumption such as rice. Fitch has rated Sri Lanka with "BB-" which is three grades below investment grade. and high interest local and international burdens [7]. Sri Lanka in mid-2007 sought to borrow $500 million from international markets to shore up the deteriorating exchange rate and reduce pressure on repayment of the domestic debt market [10]. Customs data places U. and several high-profile assistance projects were launched in 2003. The tea industry which existing since 1867 is not a part of this sector of agriculture. U. exports to Sri Lanka in 2002. Standard and Poor's maintains Sri Lanka is constrained by providing widespread subsidies.S. [edit] Credit Rating and Commercial Borrowing Sri Lanka had applied for credit ratings from international agencies in its efforts to apply for loans from international markets in 2005 after the election of Mahinda Rajapakse as president. 4456 ships visited Sri Lankan ports. in comparison to CIA estimates of 89 % of GDP [9].

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