Sri Lanka's economy grew 6.4 percent in the June-September this year, the country's Central Bank said in Colombo Friday.

This was an improvement compared with the growth of 5.5 percent during the corresponding quarter of 2004.

The bank said the service sector had recorded the highest growth rate contributing 65 percent to the overall growth.

The economic growth in the first three quarters of the year was 5.5 percent in 2005 against 5.8 percent in the corresponding period of 2004.

Sri Lankan economy has recorded continued growth since the government and the Tamil Tiger rebels entered the February 2002 ceasefire.

Commenting on the tsunami devastation and its recovery, the bank said that "the adverse effects of the tsunami continued to be felt in the third quarter of the year. The most affected sub- sectors, fishing and hotels and restaurants, are still in the process of recovering."

The Central Bank said the construction sector grew 6.7 percent in the third quarter of 2005 on the strength of the reconstruction activities of tsunami affected dwellings and hotels.

The bank added that the growth performance in the third quarter reflected the continuation of the 6 percent growth momentum recorded in the second quarter of 2005.

Economic analysts, however, said the expansion of economy would depend heavily on the continuation of peace process with the Liberation Tigers of Tamil Eelam (LTTE) rebels.

Heightened violence in the north has raised war fears as the Tigers since the beginning of this month have killed 40 soldiers through a series of claymore mine explosions.

Source: Xinhua