Lanka Q3 growth slows to 4.8%

Sri Lanka’s third-quarter economic growth slumped to 4.8% year-on-year, its weakest pace in nearly three years amid falling exports and tight monetary policy, data showed yesterday.

The growth to the end of September was down from 8.5% recorded in the same three months of 2011 and was the slowest since the final quarter of 2009.

Exports — which range from garments to tea — have slumped in the face of the global downturn, while agricultural output has been hit by a drought.

Economic activity has also been hit by high interest rates aimed at averting a balance of payments crisis. Authorities have been struggling to reduce the island’s trade deficit which has drained foreign reserves.

Economists said the data could prompt the central bank to cut benchmark interest rates early in 2013 after it reduced borrowing costs last week for the first time in nearly two years.

Sri Lanka recorded an impressive 8.3% growth rate last year.