The economy in the second quarter had grown by 12.3% as against a 16.4% contraction a year ago, while full recovery is yet to be achieved, according to the latest GDP data released by the Department of Census and Statistics (DCS) yesterday.

All three major economic activities recorded significant positive growth rates with Agriculture up 8.1%, the Industrial sector up 22.1% and Services by 7.5%. “These recorded high growth rates come back as a result of the contraction reported in these activities in the second quarter last year,” DCS said.

The 16.4% negative growth in 2Q of 2020 was the largest drop in the series of GDP growth rates ever recorded in Sri Lankan history according to the DCS.

In 2Q of 2021 the Agriculture sector share of GDP at current prices was 9.2%, Industry accounted for 27% and Services was 57.9%. Taxes less subsidies on products component contributed 5.8% share to the GDP in 2Q.

DCS said the 2Q GDP at constant price increased to Rs. 2.17 trillion from Rs. 1.9 trillion in 2Q of last year. At current prices GDP rose by 20.6% to Rs. 3.6 trillion from Rs. 3 trillion.

However, DCS said: “The economy still has not reached at least the GDP level, reported in the second quarter of 2019. That indicates the level of GDP yet to be achieved to recover the economy.”It said the performance of the economy during 2Q was at “satisfactory level,” until the third wave came in late April, when compared to the same quarter in the previous year.

“Unlike in 2020, people were able to celebrate the Sinhala and Tamil New year festival this year, even under some COVID-19 health warnings and precautions,” DCS said.

It said many people in the society enjoyed this great relief after being under a long period of imposed restrictions, such as doing business activities, travel restrictions, and health precautions.

 “As a result of this, especially in the month of April, this peaceful environment, affected pleasantly to run most of the business activities well, except very few, like international tourist arrivals-related businesses and entertainment-related businesses and cultural activities,” DCS said in its statement.  

It recalled that soon after the end of Sinhala and Tamil New Year festival, and end of the month of April, the third wave of the COVID-19 pandemic arose, with a growing number of COVID confirmed patients reported from all districts in the country.

“As a result of the fast spreading of the COVID-19 pandemic and the new variant of COVID-19 Delta virus, the Government decided to impose travel restrictions from 21 May, covering the whole country in order to prevent the spread of the virus. However, when compared to the nature of the lockdown period in 2020, it was not as strict this year,” DCS said.

It noted that the Government permitted all the agriculture-related activities, all the manufacturing activities, construction work and many services-related businesses to continue their work even under this lockdown period. 

“This created some sort of favourable environment to continue businesses in the second quarter of this year, when compared to the situation and the nature of the lockdown period in the second quarter of 2020. As a result, most economic and business activities have reported expansions in their industries when compared to the second quarter in 2020,” DCS said.

Following is detailed analysis of the performance of the three main sectors of the economy.

Performance in agricultural activities

In the second quarter of 2021, due to the permission given by the Government to continue their work in all the agriculture-related activities even under this lockdown period, the agriculture activities as a whole reported a substantial expansion by 8.1% when compared to the 8.2% negative growth recorded in the second quarter of 2020. 

Most of the agriculture activities reported positive growth rates. Especially ‘marine fishing’ (24.7%), ‘animal production’ (18%), ‘growing of rubber’ (15.7%), ‘growing of oleaginous fruits, including coconut’ (14%), ‘growing of tea’ (13.4%), ‘fresh water fishing’ (7.6%), ‘growing of cereals’ (6.6%), ‘growing of fruits’ (6.5%), ‘growing of spices’ (4.7%), ‘forestry and logging’ (4.2%).

However, during this quarter ‘growing of rice’ (5.1%) and ‘growing of vegetables’ (4.5%) contracted slightly.

Performance in industrial activities

During the second quarter of 2021, the overall industrial activities reported a considerable level of growth by 22.1%. However, the gross value addition in the industrial sector has not reached even the 2019 level. This high positive growth is basically down to the drawback in the second quarter in the year 2020.

Overall manufacturing activities grew by 26.5% during the second quarter of 2021 when compared to the same quarter in the previous year. The ‘manufacture of textiles, wearing apparel and leather related products,’ which accounted for 4.4% of the overall GDP, grew by 60.7%, while all other manufacturing activities reported high positive growth rates – such as ‘manufacture of rubber and plastic products’ (66.8%), ‘manufacture of furniture’ (54.4%), ‘manufacture of other non-metallic mineral products’ (41.3%), ‘other manufacturing, repair and installation’ (28.1%), ‘manufacture of chemical products’ (13%).

Among the ‘industrial activities,’ the ‘construction’ activity, which corresponds to 6.8% of share within the industry sector, recorded a substantial growth by 18.2% when compared to the second quarter of 2020. Following that growth in construction, the ‘mining and quarrying’ activity too recorded a positive growth rate of 17.9% this year. 

Meanwhile ‘electricity, gas, steam and air conditioning supply’ activity reported a positive growth rate of 12.8%. Further, the ‘water collection, treatment and supply’ activity recorded 3.2% of positive growth this quarter.

Performance in services activities

The service sector too reported moderate growth of 7.5%. However, many services activities are in the stage of recovering and have not met the expected levels. This 7.5% of expansion in the services sector was supported especially by the sub activities of ‘IT programming consultancy and related activities’ (24.2%), ‘transportation of goods and passenger including ware housing’ (20.4%), ‘telecommunication’ (19.6%), ‘insurance services’ (14.4%), and ‘financial service activities’ (14.3%). In addition, the ‘real estate activities’ (5.5%), ‘professional services’ (3.4%), ‘other personal services’ (2.6%) and ‘wholesale and retail trade’ (1.0%) expanded. 

In addition, the ‘accommodation, food and beverage serving activities’ reported 42.6% of growth this quarter. It did not show a recovery in this activity. The 42.6% recorded growth was due to the sharp drawback (63.6%) recorded in the second quarter last year. When compared to that quarter, the situation prevalent in the second quarter of 2021 was favourable for ‘accommodation, food and beverage serving’. 

Further, the gross value addition from this activity in the second quarter 2019 was Rs. 34,123 million. In the second quarter of last year, it reduced sharply up to Rs. 12,437 million. However, in this quarter it increased again to Rs. 17,738 million.

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