Sri Lanka’s economy grew by 6 percent in 2008, the government statistics department announced yesterday while the Central Bank has estimated a downward revision for growth in 2009 to be around 5 and 5.5 percent because of the global economic crisis.

The Census and Statistics Department said Sri Lanka was one of the few countries to record positive growth in a year that saw the global economy go into a recession.

The Gross Domestic Product (GDP) grew by 6.8 percent in 2007 but fell to 6 percent last year.

"The first three quarters of the year recorded GDP growth above 6 percent but the fourth quarter reported a 4.3 percent growth rate because of the effects of the global financial crisis," the statistics department said.

The trade deficit had widened to US$ 5.8 billion in 2008 as against US$ 3.6 billion in 2007.

"In dollar terms, total earnings from exports have gone up marginally by 6.5 percent and total payments for imports increased rapidly by 24 percent during 2008," the statistics department said.

Foreign currency reserves had dwindled over the year as a result of the global financial crisis and Central Bank intervention to stabilize the exchange rate prompted Deputy Finance Minister Dr. Sarath Amunugama to say the country is facing a foreign exchange crisis.

Reserves amounted to US$ 3 billion in December 2007 dropping to US$ 1.7 billion in December 2008.

The Government is negotiating for a US$ 1.9 billion standby facility from the IMF.

The statistics department said remittances had increased by 16.7 percent to almost US$ 3 billion during the year.

Tourist arrivals dropped by 11.2 percent.

Inflation after peaking at almost 29 percent in June began to slide ending the year at 14 percent.

The agricultural sector grew by 7.5 percent in 2008, the highest since 1990.

The tea, rubber and coconut industries grew by 4.3 percent, 10.3 percent and 5.2 percent respectively.

Meanwhile minor export crops recorded a 2.1 percent negative growth during the year.

Paddy production increased by 22.9 percent and the land area cultivated had also increased by 28.5 percent while the harvested extent increased by 28.8 percent.

Livestock production increased by 5.6 percent in 2008.

Vegetable and fruit production increased by 5.3 percent and 4.1 percent respectively.

The statistics department said the industrial sector grew by 5.9 percent in 2008.

The manufacturing sub-sector recorded a 4.9 percent decreasing from 6.4 percent in 2007 reflecting the tough domestic and external economic conditions the sector is operating in.

Industrial exports grew by 3.2 percent with garment recording a 3.9 percent growth over the previous year while agricultural exports increased by 23.1 percent.

The sub-sector electricity, gas and water recoded a 2.7 percent growth in 2008.

Hydro-power generation grew by 3.3 percent and the statistics department said hydro-power contributed 41.5 percent to total electricity generation last year.

Thermal power generation decreased by 1.4 percent in 2008.

Gas production contracted by 10.2 percent. The statistics department said this was caused by the reduction in demand due to high prices during the year.

The construction sector also recorded a 7.8 percent growth in 2008 as against 9 percent the previous year.

The services sector grew by 5.6 percent as against 7.1 percent in 2007.

The telecommunication sector grew by 22.3 percent. Fixed and mobile telephones in use had increased by 25.7 percent and 38.8 percent respectively.

The number of containers handled at the port increased by 9.1 percent while transshipment increased by 12.8 percent in 2008.

The number of new vehicles registered fell by 11 percent during the year although agricultural vehicles had increased by 11.3 percent along with three wheelers at 4 percent.