|Money from workers overseas powers Sri Lanka’s growth
Sri Lanka's economy grew 6.8 percent in the second quarter, up from 6 percent last year thanks to foreign cash inflows including migrant remittances which helped a recovery, the central bank said.
The strong economic activity in the three month period ending June showed Sri Lanka was on track to achieve a growth rate of 7.5 percent in calendar 2013, up from 6.4 percent in 2012, the Central Bank of Sri Lanka said.
In its monthly policy review, the bank said foreign inflows from tourism, migrant worker remittances, foreign direct investments and foreign loans to local banks contributed to economic expansion.
“However, some volatility was observed in the domestic foreign exchange market recently, which could be attributed to the likely tapering of quantitative easing in the United States affecting emerging markets,'' the bank noted.
The bank, however, left policy interest rates unchanged since a 50 basis point cut in bench mark rates in May.
“The downward movement of short term interest rates has begun to permeate to interest rates of longer term loans and this trend is expected to gather momentum over the coming months,'' the bank said.
The International Monetary Fund had warned Sri Lanka against interest rates reductions saying it could fuel inflation.—AFP