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| Tuesday, 5 October 2004 |
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Impressive achievement The prolonged drought and the escalation of fuel prices in the world market notwithstanding, the Gross Domestic Product (GDP) has grown, in real terms, by 5.2 per cent in the second quarter of 2004 over the corresponding quarter of the previous year. This is a continuation of the growth momentum of the economy. Based on the first half performance and taking account of the impact of the drought on Yala agricultural production, as well as the increase in fuel prices on all economic sectors in the second half of the year, GDP growth for the year as a whole is projected in the range of 5.0 - 5.5 per cent, according to the Central Bank. This is an impressive achievement considering the present circumstances. Many analysts had earlier expressed fears that economic performance would be drastically hampered by global developments (oil price hikes, currency fluctuations etc) that put pressure on our economy. The negative impact of the drought in certain districts that affected the 2003/2004 Maha season agricultural production as well as hydro power generation was another factor that led them to this conclusion. Although consumer confidence is a sign of a healthy economy, there are encouraging signs that the economy is relaying more on investment. The expansion of the private sector, the constant inflow of foreign investment and the recovery in exports have also augured well for the economy. Central Bank statistics show that the services sector is booming. The sector, which has continuously recorded over six per cent growth during the last eight quarters, continued to record the highest growth (7.1 per cent) and contributed 76 per cent to the overall economic growth in the second quarter of 2004. This is a trend that must be continued for the overall health of the economy. The further growth of the banking and Insurance sector will augment this momentum. There is more scope for the agriculture sector to grow beyond the 3.3 per cent it has recorded for the quarter. We should not lose sight of agriculture - still our primary sustenance - while pursuing ambitious industrialisation plans. The resolution of issues related to the availability of fertiliser and the infusion of advanced technology will help farmers to increase productivity. Both agriculture and industries sectors are essential components of the economy and there are many areas where they actually overlap. A bustling tea factory with full packaging facilities is a prime example. No economy can go forward without a construction boom. The Construction sector continued to grow during the second quarter as in the first quarter, but at a higher pace. With many apartment and trade complexes being built at a frantic pace, the construction industry is in pole position as a prime mover of the economy. Many sectors of the economy will have to face enormous challenges over the next few years as the world trade order changes. The abolition of the Multi Fibre Agreement will affect the garment industry, which must strive to improve quality and find new markets in order to beat the competition. Likewise, the tourism industry has to face competition from emerging destinations in South East Asia and Africa. Sri Lanka Tourism has recorded impressive gains, with visitor arrivals increasing monthly. A vigorous campaign must be undertaken to maintain this position. Hopefully, all these factors would have been taken into account in the drafting of Budget 2005, which will be presented in Parliament next month by Finance Minster Dr. Sarath Amunugama. For the first time, the Finance Ministry urged business chambers and individuals to submit their suggestions for the Budget. There is no doubt that at least some of these suggestions would be incorporated in the budget, which should pave the way for an even higher rate of growth for the year ahead. |
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