SL’s economy grows 6.7% in 2Q

by Rohana Jayalal

Sri Lanka’s economy grew 6.7% in the second quarter of the year, compared to 4.4% in the first quarter, and the Gross Domestic Product (GDP) during the April-June quarter (2Q15) grew by 6.7 percent compared to the corresponding quarter last year with the three pillars of the economy — agriculture, industry and services — performing better, the Director General, Department of Census and Statistics, Dr. A.J. Satharasinghe told the media on Wednesday..

Sri Lanka’s GDP in the January-March quarter (1Q15) grew at 6.4 percent but the numbers are not comparable because of the change in the base year. “Rebasing of the GDP is a region-wise exercise based on the International Monetary Fund’s instructions issued in 2011,” said Dr. Satharasinghe.

From 2016, the base year for Sri Lanka’s national data will be 2013 as the 2013/14 countrywide economic census provides the most up-to-date information on the structural changes of the economy, Dr. Satharasinghe said. The rebased data shows the Sri Lankan economy grew by only 4.5 percent in 2014 and 3.4 percent in 2013. The notable feature is that this was the first time the Census Department rebased the country’s GDP to 2010 from the earlier 2002.

The 2Q15 GDP improved from Rs.1.93 trillion to Rs.2.06 trillion under the rebased national accounts..

The services sector was the fastest to grow at 7.9 percent year-on-year while the agriculture, forestry and fishing activities grew by 5 percent and the industry by 2 percent.

According to figures released by the Department of Census and Statistics, the services sector share of the overall GDP was a dominant 61.2% in the second quarter followed by 23.5% for industry and 7.5% for agriculture.The Agriculture, Livestock and Forestry sub-sector grew substantially by 5% compared to the second quarter of 2014, but the overall contribution of agriculture, livestock and forestry activities to the total GDP had further declined by 0.12%. The marine fishing and marine aquaculture sub-sector recorded the highest share of 1.2%.

The sub-activities in the agricultural sector showed that the production of cereals and rice rose by 24 percent and 66.2 percent, recording the highest growth YoY. But the tea, rubber and fresh water fishing and aquaculture industries dipped 7.2 percent, 24 percent and 21.9 percent.

The paddy harvest in the 2015 Yala season was the highest ever recorded paddy production which is 90.9 million bushels. In comparison, during the second quarter of 2014 the sub-activity of ‘growing of tea’ dropped by 7.2%.

The services sector recorded the highest growth rate of 7.9%, while agriculture, forestry and fishing activities posted 5% growth.

The industry sector recorded a growth rate of 2% in the second quarter of 2015, compared to a year earlier.In the first half, the economy grew by 5.5% with services making a 7.09% improvement followed by 3.32% in agriculture and 1.29% in industry.

In the industrial sector, construction grew by 6.4 percent YoY but mining and quarrying, manufacturing textiles and apparel, manufacture of refined petroleum products and other non-metallic mineral products declined against the corresponding quarter in 2014.

In the services sector, all sub-sectors except for IT programming and consultancy services and professional services, showed growth.

Sri Lanka’s tea exports for this quarter of 2015 amounted to 78,334.5 MT, a decline of 3,875 MT compared to the corresponding period last year, a decline of 4.7% in exports. The average price of one kilogramme of tea in the second quarter of 2015 was Rs. 400.93. Industry activities which contribute nearly 23.5% to total GDP recorded a growth rate of 2% in the second quarter of 2015.

The sub-activity of ‘manufacture of textiles, apparel and leather products’ recorded a negative growth rate of 5.9% in this quarter. Despite the export value of apparel increasing by 1.9%, the export volumes of textile and leather products decreased by 10.3% and 8.8% in the second quarter of this year. The real value of ‘electricity, gas, steam and airconditioning’ had increased by 3.3%. Construction activities grew by 6.4%. The import of cement and the domestic supply of cement grew by 4.7% and 31.1% in the second quarter of 2015.The service sector contributed 61.2% to the GDP, the highest share.

Wholesale and retail trade which contributes nearly 13.5% to the total GDP, reported a 5.9% growth rate in the second quarter of 2015.

Wholesale and retail trade activities were affected by fluctuation in total imports and total domestic production. Thus, the growth of these activities were dependent on three variables of imports, agriculture production and industrial production.

While this is Sri Lanka’s GDP based on the ‘production approach’, GDP compilation based on the ‘expenditure approach’ will be released in the near future.

According to the Balance of Payment (BoP) statistics of the Central Bank, the total import expenditure in the second quarter of this year increased to Rs. 628,424 million from Rs. 552,744 million in the corresponding quarter of last year, a high growth rate of 13.7%.