The economy had shrunk by 11.5% in the first quarter of this year marking three successive double digit contractions. 

The Agriculture sector recorded an expansion of 0.8% while Industries and Services sectors recorded 23.4% and 5.0% negative growth rates respectively during this quarter from a year ago. Last year the economy suffered its worst contraction of 7.8%. 

The Department of Census and Statistics said the three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ in 1Q of 2023 have contributed their share to the GDP at current prices by 8.0%, 28.7% and 58.2% respectively, while ‘Taxes less subsidies on products’ component has contributed 5.1% of share to the GDP in the first quarter of year 2023.

DCS said the Gross Domestic Product for Sri Lanka for the first quarter of the year 2023 at constant price (2015) has declined up to Rs. 3,114,187 million from Rs. 3,519,400 million which was recorded in the first quarter of the year 2022. 

In addition, the Gross Domestic Product for Sri Lanka for the first quarter of 2023 at current price has increased up to Rs. 7,328,574 million from Rs. 5,543,306 million which recorded in the same quarter in year 2022 registering 32.2% of positive change in the current price GDP.

DCS said when compared to the first quarter in the year 2022, the unfavourable condition prevailed in the agricultural activities has been changed to a favourable situation by the first quarter of 2023 and has ensured some sort of relief in the agriculture sector. 

Further, the economic background of the country did not encourage the investments during this period due to the high interest rates. Hence, most of public and private construction works were halted due to the increase of input prices in the construction sector while restrictions imposed on imports by the government have made an adverse effect on the manufacturing industry sector and services sectors. 

Also, the high input prices have caused a decline the production of manufacturing and some agricultural activities. In addition, the decline of the exports of the apparel sector were experienced during this quarter.

Performance in Agricultural Activities

In the first quarter of the year 2023, the agriculture activities have recorded an expansion of 0.8% when compared to the 4.4% of negative growth recorded in the same quarter in the year 2022.

The expansion in the agricultural activities were mainly driven by ‘Growing of rice’ (42.1%), ‘Fresh water fishing and freshwater aquaculture’ (16.9%), ‘Growing of cereals’ (13.0%), ‘Agriculture supporting activities’ (10.3%), ‘Growing of spices’ (8.8%) ‘Plant propagation’ (6.7%) ‘Growing of fruits’ (4.4%) and ‘Growing of vegetables’ (1.5%). However, some agricultural economic activities such as ‘Forestry and logging’ (25.5%), ‘Animal Production’ (11.9%), ‘Marine fishing and marine aquaculture’ (9.2%), ‘Growing of tea (7.6%), ‘Growing of oleaginous fruits’ (4.8%), and ‘Growing of rubber’ (0.8%) have recorded negative growth rates in this quarter.

Performance in Industrial Activities

During the first quarter of the year 2023, the overall industrial activities have reported a shrinkage of 23.4% compared to the 3.7% negative growth rate reported in the same quarter in the year 2022. 

Among the ‘Industrial activities’, the ‘Construction’ and ‘Mining and quarrying’ activities have recorded negative growth rates of 38.3% and 45.7% respectively during this quarter. The overall manufacturing industry contracted by 14.2% during this quarter indicating a huge drawback in this sector. The manufacturing activities have reported contractions in this quarter with respect to the same quarter of the year 2022 including ‘Manufacture of basic metal and fabricated metal products’ (43.7%), ‘Manufacture of machinery and equipment’ (35.0%), ‘Manufacture of furniture’ (33.1%), ‘Manufacture of wood and wood products’ (31.8%), ‘Other manufacturing and repair and installation of machinery and equipment’ (30.5%), ‘Manufacture of other non-metallic mineral products’ (23.0%), ‘Manufacture of chemical products’ (22.0%), ‘Manufacture of rubber and plastic products’ (16.2%), ‘Manufacture of food, beverages and tobacco products’ (10.2%), ‘Manufacture of textiles, wearing apparel, leather and other related products’ (8.5%) and ‘Manufacture of paper products’ (1.4%) have reported considerable declines during this period. The ‘Manufacture of coke and refined petroleum products’ is the only activity with a positive growth rate in this quarter indicating an expansion of 92.9%.

The ‘Electricity, gas, steam and air conditioning supply’ and ‘Water collection, treatment and supply’ activities have recorded 15.0% and 5.6% of contractions in this quarter.

Performance in Services Activities

In the first quarter of the year 2023, the performance of the service sector has declined by 5.0% when compared to the 1.8% drawback of the same quarter of year 2022.

According to the quarterly review of this quarter, the ‘Insurance services’ and ‘Financial service activities’ have reported downturns of 38.3% and 33.2% respectively. Further, ‘Programming and broadcasting activities’ (28.7%), ‘Real estate activities and ownership of dwelling’ (18.3%), ‘Human health services’ (8.7%), ‘IT programming consultancy and related activities’ (7.2%), ‘Professional services’ (4.4%), ‘Telecommunication’ (4.0%) and ‘Wholesale and retail trade’ (1.1%) activities have reported negative growth rates.

Moreover, the activities of ‘Accommodation, food and beverage serving activities’ (5.2%), ‘Postal and courier services’ (4.3%), ‘Educational services’ (3.1%), ‘Transportation of goods and passengers including warehousing’ (2.8%) and ‘Other personal services’ (1.3%) have reported positive growth rates during the first quarter of 2023.

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