A sudden increase in exports and farming output has led to unexpected second quarter growth in the Sri Lankan economy. Compared with the second quarter of 2006, GDP was up 6.4%, slightly above the predicted 6.1%.

Sales of textiles and clothing to America and Europe increased rapidly in May and, despite showing no increase at all in the first quarter, agricultural production rose 3.5% in the second quarter. The textile and clothing sector, mainly located in the Western province, contributed greatly to the 7.4% economy increase in 2006, and it is hoped that the industry will continue to drive growth for the remainder of 2007. Governor Cabraal expects the $26 billion economy to expand by 7.5% this year and by 8% in 2008.

Despite this, the economy still faces a number of difficulties such as political unrest and widespread drought, prompting analyst Geeth Balasuriya’s description of these full-year forecasts as unachievable.