Sri Lanka’s economy expanded at the slowest pace since 2009 last quarter as faltering global demand hurt exports and a drought curbed farm output.
Gross domestic product rose 4.8 percent in the three months through September from a year earlier, the statistics department said today. That compares with a 6.4 percent expansion in the previous quarter and the median 6 percent estimate in a Bloomberg News survey of six economists.
The Central Bank of Sri Lanka on Dec. 12 unexpectedly lowered its policy interest rates for the first time since 2011 after two increases this year to spur growth. The island’s overseas sales of items from garments to tea have declined for all except one month this year.
”Growth slowed down due to weaker external demand and credit being tighter,” Samantha Amerasinghe, an economist at Standard Chartered Plc in Colombo, said before the report. “The central bank is turning to an easing bias because in 2013 they’ll be looking to go back to a growth phase.”
Sri Lanka’s monetary authority raised borrowing costs in February and April in the biggest overhaul of economic policy since the end of its civil war in 2009. It also let the rupee weaken to tackle a trade deficit that pressured reserves.
The central bank last week cut its reverse repurchase rate to 9.5 percent from 9.75 percent and the repurchase rate to 7.5 percent from 7.75 percent.
Gross domestic product may rise 6.8 percent in 2012, lower than an earlier estimate of 7.2 percent, central bank Governor Ajith Nivard Cabraal said in September. The monetary authority has forecast that GDP will increase by about 7.5 percent in 2013.
Sri Lanka’s inflation accelerated to a three-month high in November after a drought hurt farm output. Consumer prices in the capital, Colombo, rose 9.5 percent from a year earlier, and could remain “somewhat elevated” before moderating toward the second quarter of 2013, the central bank said last week.
The country’s rate is among the highest in a basket of 17 Asia-Pacific economies tracked by Bloomberg. Moody’s Investors Service said last month that the outlook for the nation’s B1 rating is positive, even as it hinges on the “effective management of macroeconomic challenges.”
The rupee has weakened about 11 percent against the dollar this year and rose 0.3 percent as of 2:34 p.m. today. The Colombo All-Share Index of stocks closed 0.1 percent higher.
Agriculture fell 0.5 percent in the third quarter from a year earlier, today’s report showed. Services rose 4.6 percent and industry grew 7.3 percent.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at email@example.com