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| Sunday, 4 July 2004 |
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| News Business Features Editorial
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Increased economic activity sees upward trend by Gamini warushamana The prevailing peaceful situation together with the continuing ceasefire agreement has helped to increase economic activities across the entire country, which has resulted in the Sri Lankan economy recording an economic growth of over 5.5 percent for seven consecutive quarters. During the first quarter of 2004 it has recorded a GDP growth rate of 6.2 per cent over the corresponding period of the previous year. The Central Bank has projected that the annual growth rate for this year would be between 5 and 5.5 per cent. The data related to the economic growth of the first quarter was released by the CB on Tuesday (29) at a press conference held at the CBSL in Colombo. During the first quarter the service and industrial sectors have grown by 9.5 and 5.8 per cent respectively while the agricultural sector contracted by 1.4 per cent. The economic recovery began in the second half of 2002. It was stimulated by consumer confidence as well as increased consumer demand from the Northern and Eastern provinces. The expected boost to investor confidence was observed only from the second half of 2003 and it has continued in the first quarter of 2004 as well. There was an upsurge in investment activities, particularly in the private sector. The service sector maintained its buoyancy growing by 9.5 per cent and contributing over 80% to the overall growth. The wholesale and retail trade sector have grown by 9.5%. Growth in imports and exports are 17.1% and 9.9% respectively. Banking, insurance and real estate sector increasd by 9.8%. Transport, storage and communication sector have expanded by 14.3%. Port services have grown by 8.3% and the transport sector expanded by 5.1% driven by external trade expansion. The telecommunication sub sector has shown a significant expansion of 31.8% mainly owing to the increase in mobile phone usage across the country. The manufacturing sector grew by 5.9%, and factory industry by 5.9% with favourable demand from both export and domestic markets, construction sector grew by 6.3%, electricity gas and water sector expanded by 2.2% and mining and quarrying sector grew by 5% have contributed to the 5.8% expansion in the industry sector. The contraction of the agriculture sector is a result of dry weather condition that prevailed. It has affected domestic agriculture, mainly the paddy cultivation of the Maha season. Maha season paddy production has declined by 11.2% following low output in Kurunegala and Anuradhapura districts. The production in the Northern and Eastern provinces however has grown by 11% during the period. Vegetable, subsidiary food crops and minor export crop outputs have also declined . Tea production has grown slightly by 0.8%, coconut output increased by 19% . Owing to attractive international prices rubber production has increased by 22.3% while fish production has increased by 2.2%. The downward trend in consumer price inflation has continued during the first quarter of 2004. Expansion in domestic agriculture production in 2003, improvements in the distribution, conducive macro-economic environment with continuous monitory management are the contributory factors. The upside risks in longer- term growth prospects are a continuation of the ceasefire and peace process that raise consumer demand and economic activities which have already impacted positively as well as raised investor confidence, higher capital flows for reconstruction and rehabilitation that will impact positively on construction and employment opportunities and improving macro economic conditions that will further enhance growth. Implementation delays in infrastructure projects, economic policy uncertainties, slow growth in the agricultural sector, political instability and deterioration of law and order which can affect daily economic activity and the stagnation of the peace process are downward risks. |
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