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Economy contracts in 1Q 2022

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The Census Department states that the year on year GDP growth rate for the first quarter of 2022 has been estimated as negative 1.6% which indicated a considerable contraction of the economy compared to the first quarter of 2021.

At the dawn of the year 2022, the Sri Lankan economy began to improve slowly, after a difficult period of the Covid-19 pandemic in 2020 and 2021, with new expectations of economic recovery. Unfortunately, within the first quarter of 2022, the economic growth rate was reported to slow down compared to the first quarter of 2021 due to adverse effects of some factors such as inflation, foreign exchange devaluation and dollar deficit.

The shortage of chemical fertilizers during this period had a severe impact on agriculture productions and especially the production of rice, the country’s staple food crop, declined significantly. Thus, the agricultural economy recorded the highest decline in this quarter since 2015.

Also, restrictions imposed on fuel import, which is essential for many industries and services, have reduced the production in all manufacturing industries, including the construction industry as well. Accordingly, the industrial sector has also reported a significant decline in the first quarter of 2022.

The Gross Domestic Product of Sri Lanka for the first quarter of 2022 at constant (2015) price reported as Rs.3, 463,101 million, compared to Rs.3, 519,921 million recorded in the first quarter of 2021, which recorded a decline of 1.6 percent in the GDP growth rate in the first quarter of 2022 against the 4.0 percent of incline reported in the first quarter of 2021.

Further, the GDP at current price for the first quarter of 2022 has increased up to Rs.5,368,465 million from Rs.4, 573,080 million recording a positive change of 17.4 %.

The three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ have contributed their share to the GDP at current prices by 8.1 %, 31.1 % and 55.6 % respectively, while ‘Taxes less subsidies on products’ component has contributed 5.2 percent of share to the GDP in the first quarter of 2022.

Meanwhile in the first quarter of 2022, Agriculture and Industrial sectors recorded contractions of 6.8 percent and 4.7 % respectively while the Service sector recorded a trivial expansion of 0.7 % when compared to these values with the first quarter of year 2021.

In the first quarter of 2022, the overall agriculture sector recorded 6.8 % of considerable contraction when compared to the 6.4 % expansion recorded in the first quarter of 2021.

The shortage of chemical fertilizers severely affected the yield of most agricultural activities in this quarter.

The overall industrial activities have reported a considerable contraction of 4.7 % in this quarter compared to the high expansion of 6.0 percent reported in the first quarter of year 202

All the manufacturing activities have recorded contractions during this period and as whole manufacturing activities indicate 6.9 % contraction during the first quarter of year 2022, when compared to the first quarter of year 2021.

‘Construction industry’ which has the highest share of 9.3 % to the GDP among the industry activities, and the ‘Mining and quarrying’ activity both recorded contractions of 2.2 % and 1.5 percent during the first quarter of the year 2022. Meanwhile the ‘Electricity, gas, steam and air conditioning supply’ activity has reported a positive growth rate of 3.7 % in this quarter.

During the first quarter of 2022, the performance of the overall Service sector recorded 0.7 % of slight growth rate in overall services related activities.

In addition, all other services related sub activities have reported contractions in their overall performances during the first quarter of year 2022. Among them, ‘Programming and broadcasting activities and audio video productions’ (8.7 %), ‘Professional services’ (5.5 %, ‘Insurance, reinsurance and pension funding’ (4.4 %), ‘Other personal service activities’ (4.0 %) and ‘Transportation of goods and passengers including warehousing’ (1.0 %) have recorded considerable negative growth rates in this quarter compared to the first quarter of the previous year.

 

 

Thursday, June 30, 2022 – 01:00











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