Economy grows by 6.7% in 1Q; up 5.5% in 1H

Sri Lanka’s economy grew at 6.7% in the second quarter of the year, compared to 4.4% recorded in the first quarter, the statistics office said yesterday.

The service sector recorded the highest growth rate of 7.9%, while agriculture, forestry and fishing activities posted 5% growth. The industry sector recorded a growth rate of 2% in the second quarter of 2015, in comparison to a year earlier.

In the first half, the economy has grown by 5.5% with services clocking a 7.09% improvement followed by 3.32% for agriculture and 1.29% for industry. 

According to figures released by the Department of Census and Statistics, services sector share of the overall GDP was a dominant 61.2% in the second quarter followed by 23.5% for industry and 7.5% for agriculture.

The ‘Agriculture, Livestock and Forestry’ subsector grew substantially by 5% compared to the second quarter of 2014, but noted that the overall contribution of Agriculture, Livestock and Forestry’ activities to the total GDP had further declined by 0.12%. The marine fishing and marine aquaculture subsector recorded the highest share of 1.2%.

Harvested paddy production in the 2015 Yala season was the highest ever recorded paddy production which is 90.9 million bushels. The favourable weather which prevailed during the Yala season throughout the country was the chief reason for this huge increase in paddy production. 

In comparison, during the second quarter of 2014 the sub-activity of ‘growing of tea’ had dropped by 7.2%. 

Sri Lanka’s tea exports for this quarter of 2015 amounted to 78,334.5 MT, a decline of 3,875 MT from the same period last year. This shows a decline of 4.7% in exports. Furthermore, the average price of one kilogramme of tea in the second quarter of 2015 was Rs. 400.93 in comparison to Rs. 469.06 for the same period of 2014. 

Despite the fact the low grown tea had the largest market share, around 57% of the total tea production; it recorded a 9.3% decline in this quarter. 

The industry activities which contribute nearly 23.5% to the total GDP recorded a growth rate of 2% in the second quarter of 2015.

The sub-activity of ‘manufacture of textiles, wearing apparel and leather products’ recorded a negative growth rate of 5.9% in this quarter compared to the corresponding quarter of 2014. 

Despite the export value of apparel increasing by 1.9%, the export volumes of textile and leather products decreased by 10.3% and 8.8% in the second quarter of this year.

The real value added of ‘electricity, gas, steam and air conditioning supply’ had increased by 3.3%. Construction activities grew by 6.4%. The major materials used in the construction industry had increased by 4.5% and of that cement supply increased by 13.2%. The total imports of cement and the domestic supply of cement has grown by 4.7% and 31.1% respectively in the second quarter of 2015.

The service sector contributed the highest share of 61.2% to the GDP, recording a 7.9% increase in the second quarter of 2015.

 ‘Wholesale and retail trade’ which contributes nearly 13.5% to the total GDP, reported a 5.9% growth rate in the second quarter of 2015, in comparison to the high growth of 19.3% recorded in the second quarter of 2014.

The value added of wholesale and retail trade activities were affected by fluctuation in total imports and total domestic production. Thus, the growths of these activities were dependent on three variables of imports, agriculture production and industrial production.

According to the Balance of Payment (BoP) Statistics of the Central Bank of Sri Lanka, the total import expenditure in the second quarter of this year has increased to Rs. 628,424 million from Rs. 552,744 million in the same quarter of last year, indicating a high growth rate of 13.7%. 

The real value added figure of the telecommunication has increased by 19.4%. 

The sub-activity of ‘financial service activates and auxiliary financial services’ has recorded a 13.7% growth rate for this quarter compared to 15.9% recorded during the same period last year.