The economy rebounded to a high growth trajectory expanding by 7.3 per cent in 2013 compared to the 6.3 per cent growth recorded in 2012. Sri Lanka achieved this high growth in 2013 amidst a challenging domestic and external economic environment. Stabilisation policy measures introduced by the Central Bank from early 2012 were gradually eased from December 2012, creating a more conducive environment for economic growth, although the lag in the transmission of monetary policy delayed the economy experiencing the full impact of the easing of monetary conditions during 2013.
Meanwhile, the stable macroeconomic conditions that prevailed in the country, with relatively low in?ation and interest rates together with the stable exchange rate, impacted positively on growth. Further, favourable weather conditions also supported growth particularly with the signi?cant expansion in high value added hydropower generation. Moreover, the continued infrastructure development programme of the government also contributed to achieve the expansion in economic activity. Externally, the sluggish economic growth in advanced economies impacted negatively during the first half of the year. However, there was a turnaround in external demand during the second half of the year with the gradual improvement in advanced economies including the United States and the European Union, which are Sri Lanka’s major export destinations, supporting the high growth in the second half of 2013.