Economy

Sri Lanka began a process of economic liberalisation in 1977, replacing its import substitution trade policy with market-based policies and export-oriented trade.

Exports have gradually shifted emphasis from agriculture to the services and manufacturing sectors.

The service sector accounts for over half of Sri Lanka's GDP.

Major industries include the processing of rubber, tea, coconuts and other agricultural commodities, clothing, cement, petroleum refining, textiles and tobacco. Other dynamic sectors include telecommunications, banking and insurance.

Agriculture still accounts for 20 per cent of Sri Lanka's output and employs more than one third of the workforce. The main agricultural products are rice, sugarcane, grains, pulses, oilseed, roots, spices, tea and rubber.

Another important source of income is remittances from about 800,000 Sri Lankans who work abroad - mainly in the Middle East.

Sri Lanka's growth has been steady over the past few years - apart from a contraction in 2001. The economy is expected to sustain average GDP growth at about 6 per cent until 2007. However, this growth may be affected by the impact of the tsunami that devastated Sri Lanka's coastal regions in December 2004.