Sri Lanka Economy

Economy

In 1977, Colombo abandoned statist economic policies and its import substitution trade policy for market-oriented policies and export- oriented trade. Sri Lanka's most dynamic sectors now are food processing, textiles and apparel, food and beverages, telecommunications, and insurance and banking. In 2003, plantation crops made up only 15% of exports (compared with 93% in 1970), while textiles and garments accounted for 63%. GDP grew at an average annual rate of 5.5% in the early 1990s until a drought and a deteriorating security situation lowered growth to 3.8% in 1996. The economy rebounded in 1997- 2000 with average growth of 5.3%, but 2001 saw the first contraction in the country's history, - 1.4%, due to a combination of power shortages, severe budgetary problems, the global slowdown, and continuing civil strife. Growth recovered to 4.0% in 2002 and to 5.2% in both 2003 and 2004. About 800,000 Sri Lankans work abroad, 90% in the Middle East. They send home about $1 billion a year. The struggle by the Tamil Tigers of the north and east for a largely independent homeland continues to cast a shadow over the economy. In late December 2004, a major tsunami took about 31,000 lives, left more than 6,300 missing and 443,000 displaced, and destroyed an estimated $1.5 billion worth of property.