City folks got richer in 2011; north GDP grew fastest

Their share in GDP may be shrinking but people in the Western Province got richer last year, whilst the post-war rebounding north clocked the highest growth in nominal terms.

The per capita income of the Western Province amounted to Rs. 491,000 in 2011, up by near 15% from Rs. 428,000 whilst its overall GDP grew by 15.6% as against 13.4% in 2010. However, its share in country’s GDP continued to dip, though marginally from 44.8% to 44.4% last year. The Western Province’s per capita income ratio was 1.6 times the national per capita income.

People in other provinces also saw their income gain, some much higher than those in the Western Province, whilst overall countrywide per capita income grew 15.8% to Rs. 314,000 in 2011. However, per capita income in all other provinces remained below the national average of Rs. 313,511.

As per provincial GDP data released by the Central Bank yesterday, the end of the conflict has had a positive impact on the north, which grew fastest in nominal terms, whilst surprisingly the Eastern Province’s growth was lower than in 2010.

Northern GDP grew by 27.1% as against 21.8% in 2010 whilst that of the Eastern Province amounted to 12.4%, down from 19.5%. Central, North Central and Sabaragamuwa Provinces too reported lower GDP growth in 2011 in comparison to the level enjoyed in the previous year. Apart from the Northern Province, the Southern and North Western Provinces achieved higher growth. The Eastern Province also saw its share in GDP dip along with the Central Province.

Following is the full text of the Central Bank’s release on 2011 provincial GDP performance:

Provincial Gross Domestic Product (PGDP) for 2011 has been computed by the Statistics Department of Central Bank of Sri Lanka (CBSL), based on the disaggregation of the Gross Domestic Product (GDP) estimated by the Department of Census and Statistics (DCS). In the estimation of PGDP for the provinces, the value of each line item in GDP is apportioned using relevant indicators at provincial level.

In 2011, the GDP at constant prices (real terms) grew by 8.3%, while the GDP at current market prices (nominal terms) grew by 16.7% and amounted to Rs. 6,543 billion with a per capita income of Rs. 313,511 (US$ 2,836). The disaggregation of GDP at current market prices across provinces is given in the Table 1.

Continuing the trend observed in the recent past, the share of the Western Province in GDP declined further in 2011 reducing disparities between provinces. However, the PGDP of the Western Province also grew at a healthy rate of 15.6% largely underpinned by the expansion in manufacturing and trade.

The Northern Province recorded the highest nominal growth rate and increased its share of the national economy driven by an expansion in agriculture, fishing, construction, transportation and financial services. The North Western and Southern Provinces had the next highest growth rates and also increased their share of the GDP. These two provinces benefitted from greater contributions from trade, manufacturing, financial services and transport while the Southern Province largely benefitted from the high growth momentum in the construction sector.

The nominal growth rates in the Eastern and North Central Provinces moderated and recorded a decline in their shares of the GDP, due to a setback in the Agriculture sector as a consequence of adverse weather conditions that prevailed in the first quarter of 2011. The nominal growth of the Central Province GDP also decelerated and its share declined, with the drop in hydropower generation in the second half of 2011.

All provinces recorded double digit nominal growth rates in their PGDP in 2011. The Northern Province recorded the highest growth rate of 27.1%, in nominal terms, in 2011. The PGDPs of North Western and Southern Provinces grew by 21.9% and 21.4%, respectively. However, the growth rates of the Eastern, North Central, Central and Sabaragamuwa Provinces decelerated in 2011 compared to 2010.

The main reason for the high growth in the Northern Province was the improved performance in the agriculture sector. Paddy production of the province increased by 90% to 210 million kilograms in 2011 compared to 2010. Significant increases in both inland and marine fish production in the Northern Province also contributed to this high growth in 2011.

Marine and inland fish production of the Northern Province increased by 38% and 165% to 46,370 and 2,150 metric tons, respectively in 2011. The high growth witnessed in the Northern Province was also supported by the expansion of banking services, with 34 new branches established in 2011.

The increased economic activities due to major infrastructure development projects including the Southern Highway, Mattala Airport and Hambantota Port, as well as better performance in the tourism sector, contributed largely to the high growth of 21.4% in the Southern Province GDP.

The noticeable growth in the manufacturing sector and financial sector helped the North Western Province record 21.9% growth in its GDP in 2011. Meanwhile, Eastern, North Central, Central and Sabaragamuwa Provinces have shown a marginal deceleration in their growth rates in 2011.

Adverse weather conditions that prevailed during the first quarter of 2011 adversely affected the performance in the agriculture sector in both Eastern and North Central Provinces. Paddy production of Eastern and North Central Provinces decreased by 39% and 3% to 650 and 1,144 million kilograms, respectively, in 2011. In addition, vegetable production in both Eastern and North Central Provinces dropped by 33% and 7% respectively while highland crop production of Eastern and North Central Provinces decreased by 12% and 33% respectively in 2011.

Setbacks observed in hydropower generation in the second half of 2011 affected the performance of the Central Province. Hydropower generated from the major power stations located in the Central Province dropped by 21% to 3,350 GWh in 2011, reducing the value addition in the manufacturing sector of the province.

Reflecting high growth performances in other provinces, the share of the Western Province to the overall GDP declined to 44.4% in 2011 from 44.8% in 2010. The Southern Province accounted for the second highest contribution of 11.1% in 2011, compared to 10.7% in 2010.

The third highest contribution to the country’s GDP came from the North Western Province, which was 10% in 2011 compared to 9.5% in the previous year. The contribution of the Northern Province to GDP increased to 3.7% in 2011 from 3.4% in 2010.

However, the shares of the Central, Eastern, North Central and Sabaragamuwa Provinces declined to 9.8%, 5.7%, 4.6% and 6.2%, respectively, in 2011. The contribution of the Uva Province remained unchanged in 2011.

Per capita of all provinces increased in 2011. The per capita income of the Western Province at Rs. 490,724 was 1.6 times the national per capita income in 2011. The per capita income in all other provinces remained below the national average of Rs. 313,511.

Sectoral contributions to the PGDP: There were considerable variations in the structure of the PGDP across the provinces. The agriculture sector accounted for around 3% of the GDP in the Western Province in 2011, whereas it accounted for 15-30% of the GDP in the other provinces.

The contribution of the agriculture sector to the PGDP decreased in all provinces in 2011, except the Western and Northern Provinces. The industry sector contribution to PGDP increased in 2011 in all provinces, except for Central and North Western Provinces. As in 2010, the largest contribution to PGDP from industry sector was observed in the Southern Province.

The services sector was the most dominant sector accounting for between 49.6% and 64.1% of the PGDP in different provinces. Contribution from the services sector declined in the Western and Northern Provinces, but increased in all other provinces during 2011.