Sri Lanka has recorded a high export growth of 10.7 percent to reach 560 million US dollars in July, the Central Bank said in Colombo Tuesday.

"Export earnings grew by 10.7 percent to US dollars 560 million in July 2005, outperforming the 2.5 percent growth recorded in July 2004," the bank said.

The bank added that the higher growth in exports had contributed to minimizing the widening of the trade deficit, which was limited to only 1.6 percent in July.

Despite the deficit the overall balance of payments situation has been turned around from a deficit of 223 million dollars to a surplus of 134 million dollars by the end of July 2005, the bank added.

The high performance in the agricultural and industrial exports have been cited as the reason for high export growth.

The country is set to face a presidential election by the year end and higher fuel prices and increasing inflation are threatening government targets to cut down its budget deficit.

Analysts say the country's budget deficit will widen to more than 9 percent of gross domestic product this year from a previously forecast 7.6 percent.

The Sri Lankan economy grew 4.8 percent in the first quarter this year, up from 4.4 percent in the fourth quarter of 2004.

Source: Xinhua