COLOMBO, Sept 13: Economic growth in Sri Lanka has accelerated despite a drought and an upsurge in the tropical island’s bloody ethnic conflict, according to data out on Thursday.

The country’s economy grew by 6.4 per cent between April and June compared with the same period last year, official figures showed. The corresponding figure in the first quarter was 6.1 per cent.

The island’s economic performance surprised analysts, who had expected faltering farm output and the escalating fighting to cause growth to slow more sharply.

“It’s a bit of a surprise, we were expecting 5.8 per cent growth in the second quarter,” said Vajira Premawardhana, a research director at Lanka Orix Securities. He expects economic expansion of 6 per cent this year.

However, annual growth in the second quarter of 2006 was higher at 7.7 per cent.

“The drought affected the paddy harvest. We also used more thermal power to generate electricity, because the rainfall was not enough to use the cheaper hydro power,” said Suranjana Vidyaratne, the census director general.

Economic growth in the first half of 2007 was 6.2 per cent, compared with 7.8 per cent over the same period last year, the data showed.

Agricultural output growth slid to just 1.6 per cent over the six-month period, against 7.9 per cent a year ago. Industrial growth fell to 7.2 per cent from 7.8 per cent while services dipped to 6.8 per cent from 7.7 per cent.

Central bank governor Nivard Cabraal has forecast 7.5 per cent economic growth this year, marginally up on 2006, and an acceleration to more than 8 per cent next year.

The upsurge in Sri Lanka’s separatist ethnic conflict has on average cut at least two percentage points off growth annually, the central bank has said.

Sri Lanka’s key donors have urged the government and the rebels to hammer out a power-sharing deal to allow the economy to realise its full potential.

—AFP