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Economy

Sri Lanka has in the last 20 years increasingly engaged in privatisation and moved towards market-oriented policies and export-oriented trade.
PTI | By HT Correspondent
UPDATED ON FEB 01, 2006 06:15 PM IST

Famous historically for its cinnamon and tea and moderately socialist after independence, Sri Lanka has in the last 20 years increasingly engaged in privatisation and moved towards market-oriented policies and export-oriented trade.

While tea and rubber are still important in the economy, the most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking.

By 1996 plantation crops made up only 20 per cent of exports (compared with 93 per cent in 1970), while textiles and garments accounted for 63 per cent.

GDP grew at an average annual rate of 5.5 per cent throughout the 1990s until a drought and a deteriorating security situation lowered growth to 3.8 per cent in 1996.

The economy rebounded in 1997-2000 with average growth of 5.3 per cent. But 2001 saw the first contraction in the country's history, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife.

However, it is now showing signs of recovery after the Government and the LTTE signed a ceasefire in 2002. Colombo stock exchange reported the highest growth in Asia for 2003. Today, Sri Lanka has the highest per capita income in South Asia.

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