The Census and Statistics Department data showed the Sri Lankan economy grew 7.8 percent in third quarter (3Q) this year, accelerating from 6 percent and 6.8 percent recorded in 1Q and 2Q respectively.

The 3Q is the first full quarter after the Central Bank cut its key policy rates in May by 50 basis points to show high growth rates.

The growth of the US $ 59 billion Sri Lankan economy slowed down to 6.8 percent in 2012 from 8 percent growth in two consecutive years.

After the surprise 50 basis point rate cut again in October, Central Bank Governor Ajith Nivard Cabraal said the economy was well on track to achieve its full year target of 7.5 percent.

The data showed the agricultural sector expanding by a healthy 7 percent, recovering from the 0.5 percent contraction in the corresponding quarter in 2012.

Meanwhile the industry sector grew by 8.1 percent as against the 7.3 percent growth in 3Q’12. The services sector grew by 7.9 percent compared to 4.6 percent growth in 3Q12.

The economists have often pointed out the irrational use of demand management policies such as interest rates and exchange rates to accelerate the economy as they have always proved futile in the past.

They have called for tough structural changes in export growth, reforms to SOEs, effective tax administration and tariff reform to increase government revenues, enhanced revenue mobilization to support capital expenditure and improvements in the general business climate to maintain 8 percent growth for a sustained period.

The structural composition of t he economy by and large remained unchanged. The agricultural sector contributed 11.1 percent to the overall GDP while the Industry and the Services’ sector shares remained 29.9 percent and 59.0 percent respectively.

The sub sectors under the agricultural sector; paddy, livestock, other food crops and minor export crops grew by 56.5 percent, 8.3 percent, 8.3 percent and 2.9 percent respectively.

Among the contracted sectors are tea (5.1 percent), rubber (28.1 percent), coconut (32.3 percent) and fishing (9.9 percent).

All the sub sectors under the industry showed growth. The manufacturing, mining & quarrying, electricity, gas & water and construction sub sectors grew by 6.8 percent, 12.5 percent, 11.2 percent, and 10 percent respectively.

The hotels and restaurants sector growth was the highest under services with 13.6 percent. This is followed by transport & communication (11.8 percent), export trade (9.1 percent), import trade (7.5 percent), domestic trade (6.3 percent), government services (3.6 percent), private services (7.0 percent) and banking, insurance & real estate (6.7 percent).