Colombo, Oct 26: Sri Lanka's stock market is tiny and the country's GDP is less than the turnover of a Japanese car maker, yet the island is surging to be a new tiger economy, touting a truce with Tamil tiger rebels. The Colombo Stock Exchange has been setting so many new records it has become tiresome for brokers to keep track. The all share price index has zoomed 78 per cent in the past year, making it one of the world's top gainers.

Economic reforms minister G L Peiris said the new dynamism was not just a flash in the pan, but the result of reforms and the government's commitment to cut a peace deal with the rebel Liberation Tigers of Tamil Eelam (LTTE). "We care seeing the peace dividend in very tangible form," said Peiris who is also the government's top negotiator with the rebels.

He said he was confident that the rebels would not revert to war and that the economy should record at least six per cent GDP growth this year, up from 4.0 per cent last year and an unprecedented negative 1.5 per cent in 2001.

The country's GDP output last year was 16.5 billion dollars, less than the net sales of many Japanese or Korean auto makers. However, Peiris said Sri Lanka's proposed free trade agreements with the United States, Singapore, Bangladesh, Egypt and Pakistan, among others, should make the island an attractive Centre for Foreign Investment.

Bureau Report