Sri Lanka Economy

by Asif Nazeer on 08-11-2011 in Doing Business

 

Sri Lanka Economy and its main sectors
 
At present, Sri Lanka is a lower-middle income generating nation with wide business prospects to offer for the foreign and domestic investors. Previously, Ski Lankan economy was mainly affected by the civil wars and natural calamities. After 1948, Sri Lanka came up with an economic policy that restricts the foreign investors to encourage the domestic investors. To strengthen the domestic economic condition such policy was taken. In order to target the equity Sri Lankan govt. set up various welfare programs, like: constitutional cost controls on buyer goods, cost subsidies on foodstuff and the stipulation of liberated schooling and health services. Certainly, these welfare programs achieved a lot of success in protecting human rights in the country. But also it became a bit expensive which leads to a fall in GDP. From 1951-1976 Sri Lanka had an average per capita GDP growth of 0,2% per year. 
 
In, 1978 Sri Lankan economy set off for a new dimension as the govt. had decided to follow free market economy for the rapid growth of the Sri Lankan economy. Till now, Sri Lankan govt. is highly encouraging the foreign investors. The liberalization policy was a huge success at the beginning. In this period a growth of 6% had been recorded in GDP. However after 1986 the growth curve came down a bit. The growth came down to 2.7% and from 1990-2000 it became 5%. Despite the world economic crisis Sri Lanka’s economy was quite steady and at a rate of 5%. Due to this steady and incredible growth, many investors are looking to invest in Sri Lanka.
 
The Sri Lankan Rupee (LKR) is the official currency of Sri Lanka. The Sri Lankan Rupee which is divided into 100 cents is issued by the Central Bank of Sri Lanka. It is normally written as RS. The main sectors of Sri Lanka are garments, textile, rubber, agriculture and tea. Apart from this there is much scope in Tourism Sector. Many foreign countries have invested in these sectors of Sri Lanka. Basically, United States, United Kingdom, Russia, Japan, Germany, China and India are the main investors in Sri Lanka. Sri Lanka imports goods and services from the various countries. They are: petroleum, machinery and capital equipment, consumables, motor vehicles and various manufactured goods. 
 
Now, let us focus and broadly discuss the main sectors of Sri Lanka. At first let’s start with the Tourism sector which is rapidly growing in Sri Lanka for its excellent natural beauties. Sri Lanka possesses great natural scenic beauty and the climate is also very much friendly for the tourism sector. As a result there is a hike in the number of tourist every year. It has an appeal for the tourist in all parts of it. There so many small islands which are excellent to enjoy holidays. Sea beaches in the east, south and west of the country also attract the tourists. The rich culture of Sri Lanka and ancient sculptures are also the point of interest for the tourists. There are a few national forests where a wide range of animals can be found. So, overall tourism is a great sector that has developed or has potential to develop in Sri Lanka. 
 
Now, another asset of Sri Lanka is agricultural sector. The main contributor to its GDP is the agricultural sector. This sector employs 35% of the working population and account for around 12% of the GDP. Sri Lankan tea is exported in the several parts of the world. Throughout the world it is known as Ceylon tea. There are so many lands on Sri Lanka from which tea is derived. Sri Lankan tea is very famous all over the world and it is a huge sector of import in Sri Lanka. Now, let’s discuss different areas of the tea sector of Sri Lanka. The first and foremost tea producing area is Kandy. Teas from this area are known as mid country teas. In an altitude of 2000 to  4000 tea plantation in this area is located. Matale (Madulkelle, Knuckles and Rangala mountain range included) and Pussallawe/Hewaheta (Nilamba, Kotmale and Gampola areas included) are also tea producing districts inside the Kandy.
 
Apart from Kandy the other major tea producing area is Dimbula. This area covers the great western incline of the Sri Lanka. At an altitude of 3000-5000 feet tea cultivation is done here. Dimbula tea area includes Patana/Kotagala, Hatton/Dickoya, Bogawantalawa, Upcot/Maskeliya, Nanuoya/Lindula/Talawakelle, Agarapatana, Punduloya and Ramboda. Nuwara Eliya is another important tea procuring area.  Uda Pussallawa is another tea area has two stages of tea production. During July-September and the first quarter of the year the teas are produced from this part. This tea area includes Maturata and Raga/Halgranoya. At Uva the tea production time is from July- September. The tea plantations in this area are located between 3000 feet and 5000 feet. Uva tea area includes Malwatte/Welimada, Demodara/Hali-Ela/Badulla, Passara/Lunugala, Madulsima, Ella/Namunukula, Bandarawela/Poonagala, Haputala and Koslanda/Haldummulla. At Ruhuna the tea plantations are located at a height of 2000 feet. Ruhuna tea area includes Ratnapura/Balangoda, Deniyaya, Matare and Galle. Apart from this another major industry in Sri Lanka is textile. In this field 15% of the main employment is employed.
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