Sunday Dec 22, 2024
Sunday Dec 22, 2024
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The downward spiral in the third quarter worsened with a contraction of 11.8% on the back of 8.4% negative growth in the preceding three months.
The overall Agriculture activities shrank by 8.4%, Industry by 21.2% and Services by 2.6%. In the 3Q of last year, the economy grew by 4.4% from a lower base of COVID-hit 2020.
The Department of Census and Statistics (DCS) said yesterday that the three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ contributed their share to the GDP at current prices by 8.7%, 34.5% and 54.1% respectively, while ‘Taxes less subsidies on products’ component has contributed 2.7% of share to the GDP in the third quarter of 2022.
Though the influence of the COVID-19 pandemic was comparatively low in the third quarter, DCS said several other factors highly affected the functioning of the economy of the country.
Factors such as high inflation, the energy crisis that prevailed during the early stages of this quarter, high-interest rates, shortage of inputs required for manufacturing activities, high prices of inputs, shortage of cement, high prices of construction materials, problems associated with fertiliser usage and agrochemical sectors, increase of the transport cost, difficulties in distributing goods, decrease in the demand of essential and non-essential goods and services due to the reduction of the real income of the people have directed the economy towards this decline.
Due to the above effects, the major economic activities such as construction, mining and quarrying, manufacturing activities, financial services, insurance, reinsurance and pension funding, animal production, growing of rice, growing of cereals, growing of vegetables, and marine fishing and marine aquaculture have recorded huge drawbacks of production during this quarter when compared to the same period of the previous year.
The GDP at the current price in 3Q has increased up to Rs. 6.4 trillion from Rs. 4.4 trillion a year ago registering a 45.2% of positive change. This expansion of the GDP at current prices clearly indicates the influence of the high inflation that prevailed throughout this quarter.
Following is a review of sectoral performance in 3Q;
Performance in agricultural activities
In the third quarter of the year 2022, agriculture activities have contracted by 8.7% when compared to the 2.8% of negative growth recorded in the same quarter in the year 2021. The contraction in agriculture activities was mainly driven by the ‘Marine fishing and marine aquaculture’ (33.5%), ‘Growing of cereals’ (26.1%), ‘Growing of rice’ (19.8%), ‘Animal production’ (19.5%), ‘Growing of tea’ (18.9%) and ‘Growing of vegetables (9.4%), ‘Growing of fruits’ (6.0) and ‘Growing of rubber’ (3.5%).
However, some agricultural economic activities such as ‘Plant propagation’ (39.8%), ‘Freshwater fishing and freshwater aquaculture’ (26.3%), ‘Forestry and logging’ (24.6%), ‘Growing of oleaginous fruits’ (6.0%), ‘Growing of spices’ (4.7%) have recorded positive growth rates in this quarter.
Performance in industrial activities
During the third quarter of the year 2022, the overall industrial activities have reported a shrinkage of 21.2% compared to the 2.0% negative growth rate reported in the same quarter in the previous year.
Among the ‘Industrial activities’, the ‘Construction’ and ‘Mining and quarrying’ activities have recorded negative growth rates of 33.2% and 45.9% respectively during this quarter. The overall manufacturing industry contracted by 14.8% while most manufacturing activities have reported contractions in this quarter with respect to the same quarter of the year 2021.
The manufacturing activities of ‘Manufacture of coke and refined petroleum products’ (56.3%), ‘Manufacture of other non-metallic mineral products’ (42.2%), ‘Manufacture of basic metal and fabricated metal products’ (42.1%), ‘Manufacture of furniture’ (37.9%), ‘Manufacture of rubber and plastic products’ (32.4%), ‘Manufacture of machinery and equipment’ (21.3%), ‘Manufacture of food, beverages and tobacco products’ (20.5%), ‘Manufacture of chemical products’ (11.9%), ‘Manufacture of wood and wood products’ (9.3%) and ‘Manufacture of paper products’ (1.6%) have reported considerable declines during this period.
However, the main manufacturing activity of ‘Manufacture of textiles, wearing apparel and leather related products’ has managed to report an expansion of 9.3% during this quarter.
The ‘Electricity, gas, steam and air conditioning supply’ activity has reported a positive growth rate of 3.8% while the ‘Water collection, treatment and supply’ activity has recorded a 16.7% of positive growth rate in this quarter.
Performance in services activities
In the third quarter of the year 2022, the performance of the service sector declined by 2.6% when compared to the 1.7% drawback of the same quarter of the year 2021.
According to the quarterly review of this quarter, the ‘Financial service activities’ and ‘Insurance services’ have reported downturns of 31.1% and 32.8% respectively. Further, ‘Programming and broadcasting activities’ (8.8%), ‘Professional services’ (7.0%), ‘Health Services’ (6.6%) ‘Real estate activities and ownership of dwelling’ (4.8%) and ‘Wholesale and retail trade’ (2.3%) activities have reported negative growth rates. Especially, ‘IT programming consultancy and related activities’ has declined further by 4.7% in this quarter.
Moreover, the activity of ‘Accommodation, food and beverage serving activities’ has managed to report a 39.3% positive growth rate in this quarter when compared to the comparative quarter in the previous year. The sub-activities of ‘Postal and courier services’ (6.8%), ‘Transportation of goods and passengers including warehousing’ (6.0%), ‘Educational services’ (3.9%), ‘Telecommunication services’ (3.3%) and ‘Other personal services’ (1.4%) have reported positive growth rates during the third quarter of 2022.
