SL to beat India as spending counters global slowdown

Bloomberg: Sri Lanka’s economic growth is set to outstrip India’s for the first time since 2000 as record foreign investment and Government spending fuel a resurgence after almost three decades of civil war.

The island nation’s $ 50 billion gross domestic product will increase 8.5 per cent this year, up from eight per cent in 2010 and bucking a global slowdown, Central Bank of Sri Lanka Deputy Governor Dharma Dheerasinghe said.

India’s $ 1.7 trillion economy, Asia’s third-biggest, is likely to grow 8.2 per cent in 2011 according to estimates by the International Monetary Fund, the slowest pace since 2009.

“We had problems during the last global recession, but it was in the background of a war situation,” Dheerasinghe said in a phone interview from the capital Colombo. “History won’t repeat for Sri Lanka. In the medium term, growth can even be nine per cent.”

The return to peace in Sri Lanka is luring overseas money and tourists back to the tear-drop shaped island. A $ 1 billion sale of sovereign dollar bonds last month was more than seven times oversubscribed.

President Mahinda Rajapaksa’s Government has pledged to spend $ 1 billion annually for at least three years from 2010 on projects such as a coal-fired power plant, a four-lane expressway and a container shipping hub.