Economy clocks 7.6% growth in first quarter

Tuesday, 17 June 2014 01:58 - - {{hitsCtrl.values.hits}}

Sri Lanka’s economy in the first quarter grew at a rapid pace of 7.6% in comparison to a year earlier though slower than the immediate preceding three months.

The Department of Census and Statistics revelation of 7.6% growth in GDP yesterday was against 6.1% in the first quarter of last year. However it was down in comparison to 8.2% experienced in the last quarter of 2013. The department said GDP in terms value was estimated at Rs. 857.5 billion. The Industry sector (32.7% of total GDP) rose 12.6% in 1Q2014 (vs. 10.7% in 1Q2013) driven by the 22.5% growth in the construction segment. Meanwhile, the Services sector (55.8% of total GDP) growth rose to 6.5% in 1Q2014 (from 4.3% in 1Q2013) mainly due to the export trade segment rising 16.3% (vs. a decline of -6.1% in 1Q2013). The Agriculture sector (11.5% of total GDP) rose only 0.2% in 1Q2014 (vs. a growth of 3.4% in 1Q2013), largely due to -5.7% decline in paddy segment, amidst the unfavourable weather conditions. The Government has forecast 7.5% economic growth in 2013 though some private sector analysts estimate it to be below 7%. The World Bank last week put its forecast on Sri Lanka’s economic growth in 2014 at 7.2%. Last year Sri Lanka’s annual growth picked up to a 7.3% pace from 6.3% the previous year, led by services, stronger manufacturing activity, robust agricultural growth and a pickup in domestic demand partly reflecting easing of monetary policy. The World Bank expects economic growth to moderate to 6.9% next year and further to 6.7% in 2016, which it said was slightly higher than estimates of medium-term potential growth for the country.

The IMF last month said the near-term outlook for Sri Lanka “appears positive”, aided by a recovery in advanced economies. The IMF projects real growth to continue at around 7%. “Strong export growth is likely to continue, and may facilitate a further reduction of the external current account deficit -leaving room for additional accumulation of international reserves by the Central Bank,” the IMF said. The Asian Development Bank estimate GDP growth in 2014 and 2015 to be at 7.5%. Its forecast is 1.3% and 1.1% higher than the predicted GDP growth rate for developing Asia, which is 6.2% for 2014 and 6.4% for 2015. ADB’s Asian Development Outlook (ADO) acknowledged Sri Lanka’s GDP in 2013 grew by 7.3%, reflecting recovery in domestic demand and a pick-up in exports and tourism. It added that the 7.3% growth rate achieved by Sri Lanka was “more than what was expected”.