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| Sunday, 1 May 2005 |
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Oil shock, drought slim economic growth in 2004 by Gamini Warushamana The oil shock, severe drought during the early part of the year and the floods at the end of the year slimmed economic growth in 2004 to 5.4% as against 5.9% recorded in 2003, the Central Bank said on Friday. Average crude oil prices during the year increased to US$37 per barrel from US$ 29 per barrel in 2003 resulting in the oil bill increasing to US$ 372 million. The government's overall fiscal deficit increased to 8.2 percent of GDP compared to 8 percent recorded last year. The government's total deficit and the operational losses of public sector corporations was 8.4 percent of GDP in 2004 compared to 7.8 percent in 2003 mainly due to the operational losses of the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board(CEB). Therefore to reduce the overall deficit reforming the CPC and CEB are essential said the Governor of the Central Bank Sunil Mendis. The growth for the year was strongly supported by consumption and the prevailing peaceful situation in the country increased consumption. However, consumption will decrease this year if there is no significant improvement in the peace process as consumption is a driving force of growth. The CB expects investment to be the driving force of economic growth in 2005. GNP per capita at current market price is Rs.104,839 ($1,036) in 2004 against Rs 92,287 ($956) in 2003. Sri Lanka is now considered as an upper middle income country. In the sectoral analysis the agricultural sector recorded a setback in 2004 with a 0.7% negative growth rate. The service sector recorded 7.6% growth while the industrial sector grew by 5.2%. For sustainable development in the agricultural sector the CB emphasised the need to increase productivity in the sector and has made recommendations such as improving productivity in the plantation and non plantation sectors, resolving financial and land issues,introduction of high yielding varieties of seeds, research and development, introducing modern irrigation systems and international partnerships. |
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