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Growth forecast upgraded

Sep 23, 2010 11:01:52 AM - itnnews.lk

Sri Lanka has upgraded its growth forecast to between 7.5 to 8.0 percent for 2010, on a better than expected second quarter economic expansion and stronger credit flows.

The Central Bank was earlier forecasting a growth of 7.0 percent for 2010. Central Bank Governor Ajith Nivard Cabral said the momentum has built up so we are confident that it will go up. He said they were seeing the signs of new developments. Optimism is widespread and profits of firms have been rising and the government is also pumping money to upgrade creaking infrastructure in roads, power and ports. Last week the Ports Authority gave the nod to the Sino-Sri Lanka joint venture to build a new container terminal in Colombo.

Rating agencies have also upgraded the outlook on Sri Lanka’s sovereign rating. Unemployment is also recovering from 2009 highs. The Government’s statistics office said the island’s Gross Domestic Product expanded 8.5 percent in the second quarter of 2010, the highest since the low inflation period of 2002. Bank credit is also starting to grow faster after shrinking for most of 2009.