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By Uditha Jayasinghe
In order to comprehensively capture economic activity in Sri Lanka, more effective and efficient systems need to be established to calculate Gross Domestic Product (GDP) growth with greater precision, experts said yesterday.
Economist and former Central Bank Deputy Governor Dr. W. A. Wijewardena told Daily FT that the Census and Statistics Department needs to be given better resources, training and support to improve the quality of the data compiled by them as it was crucial for effective policymaking. His comments come after Central Bank Governor Dr. Indrajit Coomaraswamy last week said as much as 0.5% of GDP growth may be unaccounted for. He also said that even though 2018 growth is likely to be about 3%, growth in Sri Lanka, by his estimation, should be at 3.5% or slightly higher. He also pointed out that there could not be such a marked gap between the growth projections made by the World Bank, International Monetary Fund (IMF), the Central Bank and the quarterly results released by the Census and Statistics Department.
“In other countries, advanced technology is used to map important economic data, such as consumption patterns and agriculture yields.
However, in Sri Lanka, the Census and Statistics Department is always given step-motherly treatment by successive Budgets. They need to be allocated more resources, given better training, and provided with better technology to capture economic activity,” Dr. Wijewardena said
He also advocated that graduates who are recruited to government jobs, such as Development Officers, should be trained to carry out surveys and gather data on behalf of the Census Department.
“There are thousands of graduates who are recruited to the public service without proper job descriptions. They can be trained to gather data to improve GDP calculation accuracy and this would also save the State funding,” he added.
Census and Statistics Department Director General Indu Bandara said setting efficient and well-coordinated systems were important to gather a wide range of data needed for GDP calculation.
“Currently, we look at a large number of varied indicators such as VAT registration, vehicle registrations, cement production, agriculture production, and government expenditure from both the public and private sector. The new methodology calls for more surveys, and there are times when we struggle to get responses for them because it means that companies have to spend time compiling the data without getting any return for the activity,” she said.
Ten new surveys are to be included in the next round of GDP data collection, which Bandara said would assist to improve the precision of GDP numbers. She also acknowledged that capturing the informal sector and Small and Medium Enterprise (SME) activity could be challenging.
“Many people who work in the informal sector change their jobs frequently, and some data in the SME sector is hard to capture because it is not recorded through taxes or other ways that is possible for us to access.”
According to the national accounts published by the Census Department, Sri Lanka’s economy grew at 2.9% in the third quarter of 2018 while the second quarter growth was estimated at 3.6%. However, the International Monetary Fund had predicted 3.5% annual GDP growth for 2018 while the World Bank‘s forecast was 4%. The Central Bank was anticipating 3.8% growth for 2018. Central Bank Governor Dr. Indrajit Coomaraswamy said, in his view, growth would be between 3.5% and 4%.
“My view is that we need to look carefully whether we are recording GDP accurately. I don’t think this is a 3% growth economy at the moment. We adopted a new methodology about two to three years ago. Everyone was saying that the methodology was excellent but that the methodology needs a lot of surveys to support it. We don’t have the sources to undertake all the surveys to support that methodology,” Dr. Coomaraswamy told reporters after the ‘Road Map’ launch.
The base year for the national accounts was moved to 2010 by the DCS, along with a new methodology to enhance the accuracy of constant price estimates and represent the real economic structure of the economy.
