Sri Lanka

We maintain our real GDP growth forecast of 5.4% in 2010 after an estimated 3.3% economic expansion in 2009 on the back of expectations of higher government and private consumption. With infrastructure and other investment projects requiring capital goods from overseas and the Sri Lankan textile sector, which makes up 40-45% of total export, expected to face stiff competition from more efficient competitors in China and Southeast Asia, we foresee import growth continuing to outpace export growth in 2011 and 2012 before dropping in 2013 as the need for capital imports decreases.

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