Economy achieves complete turnaround in 2024

•  GDP up by 5% as against 2.3% contraction in 2023
• Department of Census and Statistics says 2024 rebound paves way for more positive expectations to come
• 4Q sustains over 5% growth and sixth consecutive increase since 3Q of 2023
• Agriculture lagged with slower 1.2% growth in 2024 as against 2023 and 2.2% dip in 4Q, Industry and Services sectors grew better at 11% and 2.4% 

Sri Lanka’s economy achieved a complete turnaround in 2024 posting a 5% growth as provisional data released yesterday showed as against a contraction of 2.3% in 2023.

The turnaround was driven by Industry and Services sectors which grew by 11% and 2.4% as opposed to contraction of 9.2% and 0.2% in 2023. Agriculture sector managed to grow by only 1.2% in comparison to 2.6% in the previous year. 

‘Agriculture’, ‘Industry’ and ‘Services’ contributed their share to the GDP at current prices by 8.3%, 25.5% and 57.5% respectively, while ‘Taxes less subsidies on products’ component has contributed 8.7% of share to the GDP in 2024.

In the 4th quarter of 2024, the economy grew by 5.4% compared to the reported 4.3% positive growth rate in the same quarter of the previous year according to the Department of Census and Statistics (DCS) Sri Lanka. Reflecting its own challenges, Agricultural activities reported a 2.2% decline in 4Q, but Industries and services activities reported 13.1% and 2.5% growth rates respectively.

The DCS said after the two declined GDP in 2022 and 2023, the economy recorded a positive growth rate in the year 2024 “paving the way for more positive expectations to come.”

It also said 4Q confirmed a sixth consecutive increase starting from the third quarter of 2023. 

According to the DCS by facilitating and benefitting these expansions of the economy, both export and import volume indices had shown remarkable increases throughout the year 2024 with the increased container and cargo handling in the ports of Sri Lanka. 

More importantly, the external value of the Sri Lankan rupee was further stabilised towards the end of the year. An increase in new registration of vehicles, specially freight transport and land (agriculture) vehicles and motorcycles was seen more towards the fourth quarter of 2024. 

With the tendency to reduce interest rates, simultaneous increase in domestic credit was seen which created more liquidity in the economy especially on the hands of private institutes and individuals. Amidst these healthier changes in the economy, continuous decrease in inflation ignited the expectations about a better economy while producers were reducing their prices with the decreasing input costs. 

“All in all, there was the expected favourable economic condition in place which ultimately fuelled the anticipated expansion in the economy mainly through the economic activities of manufacturing, accommodation, construction and mining, trade, transport and personnel services,” the DCS said.

Following is an analysis by DCS of 2024’s overall performance sector-wise.

Performance in agricultural activities

In the year 2024, overall agriculture activities reported an expansion of 1.2% when compared to the 1.6% expansion recorded in the year 2023.

The growth reported in agriculture activities was underpinned by the increase in some of the weighty agriculture activities, namely; ‘Animal production’ (14.1%), ‘Growing of cereals’ (10.9%), ‘Marine fishing and marine aquaculture’ (4.8%), ‘Growing of fruits’ (4.4%), ‘Growing of rice’(3.1%), ‘Growing of vegetables’(2.8%), ‘Growing of rubber’ (2.2%), ‘Growing of spices’ (1.9%), ‘Growing of tea (1.7%). In the meantime, some agriculture activities reported declines, namely; ‘Plant propagation’ (14%), ‘Growing of other perennial crops’ (11.9%), ‘Growing of oleaginous fruits including coconuts’ (11.5%), ‘Growing of sugar cane and tobacco’ (9.3%), ‘Fresh water fishing and fresh water aquaculture’ (9.2%),’Agricultural supporting activities’ (3.1%), ‘Growing of coffee, cocoa and other beverage crops’ (2.3%), ‘Forestry and logging’ (2.1%).

Performance in industrial activities

In the year 2024, overall industrial activities expanded 11% by offsetting the 9.2% decline which was reported in the previous year.

Within the ‘Industrial activities’, almost all of the sub activities reported expansions in the year 2024. Being the main two contributors in this reported positive growth among industrial activities, ‘Construction’ (19.4%) and ‘Mining and quarrying’ (19.4%) reported notable expansions. Meantime overall manufacturing industry grew by 7.6% which was facilitated by all of the manufacturing sub activities, except ‘Manufacture of coke and refined petroleum products’ (10.1%) which reported the only decline. Among manufacturing activities, ‘Manufacture of basic metal and fabricated metal products’ (17.7%), ‘Manufacture of textiles, wearing apparel, leather and other related products’ (11%), ‘Manufacture of furniture’ (10.1%), ‘Manufacture of chemical products and basic pharmaceutical products’ (9.7%), ‘Manufacture of rubber and plastic products’ (8.6%), ‘Other manufacturing and repair and installation of machinery and equipment’ (8.5%), ‘Manufacture of machinery and equipment’ (6.3%), ‘Manufacture of food, beverages and tobacco products’ (6.1%), ‘Manufacture of wood and wood products’ (4.9%), ‘Manufacture of paper and paper products’ (3.1%) and ‘Manufacture of other non-metallic mineral products’ (2.5%) reported expansions during the year 2024. Meantime ‘Electricity, gas, steam and air conditioning supply’ and ‘Water collection, treatment and supply’ also reported positive growth rates of 6.9% and 2.7% respectively in 2024. ‘Sewerage, Waste, treatment and disposal activities’ too reported an increase of 1.3%.

Performance in services activities

In the year 2024, the overall service sector expanded by 2.4% compared to the 0.2% decline reported a year ago.

For this encapsulated growth of 2.4% in 2024, being the main facilitator, ‘Accommodation, food and beverage serving activities’ reported a 31.4% increase followed by ‘Postal and courier services’ which reported 6.3% positive growth rate. Furthermore ‘IT programming consultancy and related activities’ (6%), ‘Telecommunication’ (4.2%), ‘Real estate activities and ownership of dwelling’ (4.2%), ‘Professional services’ (3.5%), ‘Programming and broadcasting activities’ (3.3%), ’Transportation of goods and passengers including warehousing’ (2.9%), ‘Education’ (2.3%),

‘Financial service activities’ (1.5%), ‘Other personal services’ (1.5%) and ‘Wholesale and retail trade’ (1.3%) reported expansions. Meanwhile ‘Insurance, reinsurance and pension funding’ reported a 14% decrease owing to decline in pension funding. ‘Public administration and defence’ (2.9%) and ‘Human health and residential care activities’ (0.7%) also reported declines in the year 2024.