Even though Sri Lanka is a developing nation, the economy has sustained a steady growth over the past few years. It currently has a GDP of about $93.33 billion and a GDP growth rate of 7.7%. The rate of inflation currently stands around 11.3%.
Agriculture help to sustain about one-third of the working population and directly contributes around 20 per cent of GDP. The main cash crops are tea, rubber and coconuts. These provide over 75 per cent of Sri Lanka's export earnings. Rice is grown as a staple crop mainly for domestic consumption. Forestry and fishing are also important.
There are several strong development in the industrial sector as well. The main industrial sectors are mining , and manufacturing. The mining industry mailnly revolves around gemstones and graphite as the principal minerals. Iron ore, limestone, clay and uranium ore are also present in commercially exploitable quantities. Power is supplied by Hydroelectricity and is supplemented by imported oil. Important manufacturing industries include cement and textiles, both of which are valuable export earners.
Additionally there is a strong service sector involvement in the economy, amounting to about 54% of the GDP. One of the main service sector industry that is a big contributor is the tourism industry. The banking and insurance have both been performing well too. Since the mid-1990s successive governments have followed the usual prescription of market-oriented policies – privatization and deregulation – while seeking to build up potential export-earning industries. This strategy was slow to show results at first, but the government persevered and some benefits are now beginning to materialize.
The government is now hoping to consolidate its progress by further deregulation, fiscal reform, and privatization: although it has all but pulled out of manufacturing, the state still owns 90% of the island’s land and the bulk of its utilities.
India, Japan, the USA and the UK are Sri Lanka’s major trading partners. Sri Lanka's most important foreign trading partner is the United States, with exports valued at 1.8 billion in 2002, 38% of total exports. USA has been the biggest market for Sri Lanka's garment industry, taking more than 68% of the total garment exports.
In the recent years there has been an increase of growth in the information technology sector and business process outsourcing. Many large companies have established branch offices or created BOI partnerships with local companies, to outsource their work. The main driving factor behind this is the low labor cost in Sri Lanka.
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