Significant growth compared to many developed countries:

Sri Lanka records 1.5 percent GDP growth in 1 Q, 2009

Sanjeevi JAYASURIYA

Sri Lanka recorded a 1.5 percent GDP growth for the first quarter of 2009, the Department of Census and Statistics said yesterday. The three main sectors of agriculture, industry and services of GDP grew by 3 percent, 1.9 percent and 1 percent.

“This is a significant growth compared to many developed western countries where they recorded a negative growth and we could expect much improved results for the next quarter”, said Director General, Department of Census and Statistics D.B.P.S. Vidyaratne.

A few countries reported positive growth rates for the first quarter 2009. China and India indicated positive increases.

The Philippines and Australia reported a 0.4 percent increase and Singapore, Thailand and Malaysia reported a negative 6.5 percent, 7 percent and 6.2 percent growth in GDP. Sri Lanka is among those countries that recorded positive growth by indicating a positive 1.5 percent GDP growth rate, she said.

Our country’s trade is improving and the global economy is picking up and these factors will contribute to a better performance next quarter, she said.

The world economic crisis recorded globally through a financial crisis in 2008. Many countries reported a downturn in their economic performance, increases in unemployment, increases in prices, decreases in external trade and a shortage in the food supply.

In this global environment, Sri Lanka had another additional burden from the humanitarian operations against terrorism and its expenditure had risen to the highest level during this period.

The country gained successful results by ushering in peace throughout the country by eradicating terrorism. Accordingly, the economic performance for the first quarter of the year 2009 has to be reviewed in this context, she said.

“The significant drop in external trade has a major impact and retards the growth rate in the economy. The performance of the agriculture sector was above 7 percent when compared with excluding the sub sector of tea.

The sub sector tea indicated a 40.9 percent decrease mainly due to lower prices and demand for tea from external markets. This has offset the high growth rate of the agriculture sector to record a 3 percent growth rate for the period”, Vidyaratne said.

The annual average inflation rate based on the GDP implicit price indicator was 5.4 percent for the first quarter 2009. The CCPI reported a 7.8 percent increase for this period.

This is a commendable sharp downturn in process when world food prices were at a high level. The Government’s fiscal and monetary policies have also affected the price reduction. Better agriculture performance has reduced the prices of food products and decrease in fuel prices for the period under review reduced overall prices of almost all products generally.

“With the liberalization of the North and East we expect a high growth in agriculture, fisheries, tourism, construction and the transport sectors. We are looking forward to a higher growth rate during the year”, she said.

Commenting on the aspect of employment, Director P.Y.L Fernando said that the total workforce for the first quarter 2009 was 7.7 million except in the Northern province.

The agriculture sector accounted for 34 percent whereas the industrial and service sectors accounted for 25 percent and 41 percent.

“Considering the annual figures for the past six years, there has been a drop in the unemployment rate, but the 2009 first quarter recorded 5.3 percent compared to 5.2 percent last year.

It is too early to say whether there would be a reversal in the trend in the unemployment rate”, he said.