Sri Lanka could miss 7.2% growth target

Sri Lanka may miss its 2012 growth targets due to issues in the Eurozone and other export challenges, the Central Bank Governor said yesterday.

Over 60 per cent of Sri Lanka’s exports, primarily garments, are to the US and Europe, which could have a detrimental effect on projected growth of 7.2 per cent, Central Bank Governor Ajith Nivard Cabraal admitted to media.

“Our saving grace is that clothes are not something people can avoid buying,” he said, adding that the issue had been “flagged” in their projections.                         

Despite acknowledging a possible downgrade of the expected US$ 11.9 billion earnings from exports in 2012, Cabraal insisted that an official change would only be possible after reviewing first half year statistics.

In March the Central Bank reduced initial growth projections from eight per cent to 7.2 per cent, but political changes in the Eurozone including elections in France and Greece could change these targets.

However, Cabraal was upbeat that the economy could weather the storm given expected remittances and other foreign inflows are set to increase.

A sovereign bond between US$ 500 million and US$ 1 billion will be issued by the Government later this year, he added, pointing out that Sri Lanka had market confidence given its previous bond is trading at around 6%.