Economy grows 4.4% in 2016

• Growth slower than 4.8% posted in 2015
• Severe floods and drought strangled agriculture which recorded 4.2% negative growth 
• Rice growth dropped 31% in 2016, tea 11.2% and rubber 10.7%
• Highest growth of 6.7% by industries and 4.2% for services 
• 4Q 2016 saw rebound with 5.3% growth; industry 9.2% hike 

Sri Lanka’s GDP expanded by 4.4% in 2016, slowing from 4.8% a year earlier, due to a severe combination of drought and floods, and posted its weakest performance since 2013, the Department of Census and Statistics (DCS) said yesterday.

Releasing the estimated Gross Domestic Product (GDP) and other macroeconomic indicators for the fourth quarter of 2016 and for the year 2016, the department, however, noted the year ended positively with the fourth quarter reaching 5.3% growth driven by the industry and services sectors that grew 9.2% and 4.6% respectively.  

“Sri Lanka experienced inclement weather during the year 2016. Particularly, the severe flood experienced in the second quarter of 2016 and the drought prevailed during the year, which may have had an impact on the agriculture activities of the country,” the department said. 

Issuing a press release, DCS stated the economic growth rate for 2016 has been estimated at 4.4% while the economic growth rate for the fourth quarter of 2016 has been estimated at 5.3%.

The Gross Domestic Product for Sri Lanka for 2016 (January to December) at constant (20I0) price has reached up to Rs. 9,0I2,026 million. The GOP value reported for 20I5 was Rs. 8,633,890 million.

For the four major components of the economy - Agriculture, Industry, Services and Taxes – fewer subsidies on products have contributed their share to the GOP at current price by 7.5%, 27.1%, 57% and 8.4% respectively for 2016. 

During 2016, the highest growth rate of 6.7% was reported for overall Industrial activities. Meanwhile, services activities have grown by 4.2%, compared to the previous year. However, agricultural activities reported a 4.2% negative growth rate.

Overall agricultural activities reported a negative growth rate of 4.2% in 2016. Among the sub-activities of Agriculture, most of the major agricultural activities have reported negative growth rates during 2016, when compared with 2015. Among them, the sub-activity of ‘Growing of rice’ has declined drastically by 31% during 2016. 

In addition ‘Growing of tea’, ‘Growing of rubber’ and ‘Growing of cereals’ have declined by 11.2%, 10.7% and 10.5% respectively. Further, ‘Growing of fruits’, ‘Growing of vegetables’, and ‘Growing of oleaginous fruits’, including coconut have declined slightly by 3.7%, 2.1% and 0.6% respectively.

Meanwhile, ‘Freshwater fishing’, ‘ Growing of spices’ and ‘ Animal production’ have reported positive growth rates of 9.9%, 6.4% and 6.3% respectively during 2016. 

Industrial activities have recorded a significant growth rate of 6.7% this year. Among the industrial activities, the ‘Construction’ activity, which corresponds to a considerably higher share for the industrial activities, increased by 14.9%. In addition, the sub-activity of ‘Mining and quarrying’ recorded 14.4% of very high growth rate. 

During 2016, the manufacturing activity, which comes under industrial activities, has grown by 1.7%. Among the manufacturing activities, specially the ‘Manufacture of basic metal and fabricated metal products’, ‘Manufacture of rubber and plastic products’ and ‘Manufacture of machinery and equipment’ have grown rapidly during 2016 by 28.7%, 17.9% and 14.1% respectively, when compared with 2015. 

However, the ‘Manufacture of food, beverages and tobacco’ and ‘Manufacture of textile and wearing apparel’ have declined by 2.5% and 0.2% respectively. The value added of ‘Electricity, gas, steam and air conditioning supply’ has increased by 8.4% over the period under consideration.

Among the three major activities (Agriculture, Industries and Services), the Services activities gave the highest contribution (57.0%) to the GOP, recording a positive growth rate of 4.2% during 2016, when compared to the previous year. 

The performance of the Services sector was underpinned specially by the sub-activities of ‘Financial service activities’, ‘Insurance activities’, ‘Telecommunication’, ‘Programming and broadcasting activities’, ‘Education service’ and ‘IT Programming consultancy’, which reported significantly higher growth rates of 12.4%, 8.5%, 8.3%, 7.7%, 7.5% and 7.1% respectively compared to the previous year.

The DCS revealed that the GOP at constant price for the fourth quarter of 2016 has been estimated as Rs. 2,526,792 million registering 5.3% growth rate compared to the fourth quarter of 2015. 

During the fourth quarter of 2016, agriculture activities have reported a negative growth rate of 8.4%. In the meantime, the overall performance of industrial activities has increased drastically during the fourth quarter of 2016 by 9.2% and services activities have recorded a positive growth rate of 4.6%.