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| Sunday, 6 July 2003 |
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Economic growth exceeds 5% for third consecutive quarter Macro-economic stability and productive investment of available funds is critical for achieving the expected growth in the medium term while the continuation of the ongoing peace process and political stability are crucial for the sustenance of the economy's future growth. The growth in the first quarter of 2003, the third consecutive quarter in which growth exceeded five per cent, indicates that the economy has overcome the adverse situation experienced in the latter half of 2001. The 5.5 per cent growth, although lower than the six per cent in the 2002 second half, was considerably higher than the 0.5 per cent growth in the 2002 corresponding quarter. The services, agriculture and industry sectors all recorded positive growth. The services sector reported the highest growth of 7.6 per cent, contributing 71 per cent of the overall economic growth. Agriculture and industry grew by 0.7 per cent and 5.4 per cent respectively. The contributions of agriculture and industry to overall growth were three and 26 per cent respectively. The agriculture, forestry and fishing sector expanded by 0.7 per cent during the 2003 first quarter compared to the 3.1 per cent growth in the corresponding quarter of 2002. The sector was sustained by paddy production and the minor export crop subsector while other subsectors declined or grew marginally. In domestic agriculture, paddy production increased by 6.7 per cent, recording the highest ever Maha paddy output of 1.89 million metric tons this year, mainly due to the increase in cultivated area due to the ongoing peace process. Plantation agriculture faced difficulties during the first quarter of the year due to the decline in medium and low grown tea production and tea auction prices falling during the Iraq war. According to Central Bank statistics, all four industry subsectors - manufacturing; construction; electricity, gas and water; and mining and quarrying - grew positively in the first quarter, contributing to growth in the industry sector. The recovery of industries in 2002, which was one per cent of the GDP, was slower than the services and agriculture sectors due to power cuts during the early part of the year, continued weak export demand and increased costs of production. All sectors report growth The economy grew by 5.5 per cent during the first quarter of this year and achieved the set targets despite the ill effects on petroleum prices and the drop in tea exports due to the Iraqi war and the damage caused by floods, Finance Minister K.N. Choksy said last week, presenting the Mid-year Fiscal Position Report 2003. The report was issued for the first time by the Ministry to inform the public and the parliament about the economic performance of the country. The Fiscal Responsibility (Management) Law places self-imposed financial management discipline on the Government and requires the Finance Ministry to submit reports twice a year on the state of the economy. The highlights of the report are: * Industrial production grew by 4.6% * Tourism grew by 28% * Exports and imports increased by 13.5% in US$ terms * Private remittances grew by 11% * Foreign reserves to cover 5.1 months of imports * Rupee remained stable * Banks' lending rates were reduced * Income tax collections increased although VAT collection is below target * CSE achieved record levels showing investor confidence * Uninterrupted power supply * Agriculture, mainly paddy production, satisfactory |
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