The Governor of Central Bank of Sri Lanka revealed that the economy growth of the country will reach to 7 per cent this year and also the inflation will not exceed 20 per cent at the end of 2008.

Governor Ajith Nivard Cabraal also said that the Central Bank had estimated the growth would be 7 percent in 2008 and inflation at 10-11 per cent, based on an average oil price of US Dollars (USD) 85 per barrel. However, crude oil hit a record of over USD 145 per barrel last week due to which inflation will not moderate as much as originally expected.

Cabraal further said that tough economic decisions on passing the global price shocks of fuel and food on to Sri Lankan consumers have been the main reasons for record high inflation. Nevertheless, with the strengthening the economy for the future, the situation will be altered.

Cabraal pointed out that there is no reason to change the estimated growth because of upturns and downturns and the economic growth target could still be achieved even though annual consumer price inflation rose to 28.2 percent in June.