The Central Bank released its 2011 Annual Report yesterday. The report in all the 3 languages was handed over to President Mahinda Rajapaksa.
The report states that Sri Lanka’s economy grew by 8.3 per cent in 2011, the highest in Sri Lanka’s post independence history, sustaining a growth momentum of over 8 per cent for the first time in two consecutive years.
The report points out that improved consumer and investor confidence arising from the peace dividend, favourable macroeconomic conditions, increased capacity utilization, expansion of infrastructure facilities and renewed economic activity in the Northern and Eastern provinces underpinned this growth.
Inflation remained at single digit levels for the third consecutive year supported by improved domestic supply conditions, prudent liquidity management by the Central Bank and benign inflation expectations.
Referring to unemployment, the report states that the unemployment rate declined to its lowest level of 4.2 per cent in 2011 from 4.9 per cent in 2010; the total number unemployed was estimated at 342,000 in 2011 compared to 401,000 the previous year.
It also states that domestic agriculture recovered significantly in the second half of the 2011 from the setback experienced during the first half while export agriculture registered a mixed performance during the year, and further adds that policy measures introduced by the government improved agricultural production in 2011.
As per the breakdown given in the report the Industry sector remained resilient in a challenging international environment recording an impressive growth of 10.3 per cent in 2011. Similarly, the construction sector grew at a high rate of 14.2 % in 2011 compared to 9.3 % growth in 2010, reflecting the major infrastructure development activities undertaken by the government and increased construction activities of the private sector.
The Services sector contributed 61.8 per cent to the overall economic growth expanding at 8.6 per cent in 2011.
Total consumption expenditure increased significantly by 22.4 % while domestic savings contracted widening the savings investment gap in 2011.
Earnings from exports increased by 22.4 % while the expenditure on imports increased at a faster pace of 50.7% in 2011, compared to the corresponding period of 2010.
Workers’ remittances, which constitute a greater share of private transfers, continued to be the foremost foreign exchange earner in 2011, surpassing export earnings from textiles and garments for the third consecutive year.
Outlining about the tourist industry, the report points out that the Tourism Industry expanded substantially in 2011 both in terms of arrivals and earnings; major international hotel chains are being established in Sri Lanka while several reputed airlines have added Sri Lanka among their destinations. Over the medium term, the industry is poised to achieve the target of attracting over 2.5 million tourists and the tourist spending target to USD 150 per night by 2016 by facilitated high end tourists and infrastructure.
The report also states that following many notable achievements during the past two years, the Sri Lankan economy is likely to experience a year of moderation and consolidation in 2012.