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Despite challenges GDP growth rate records 2.1 percent:

Economic performance in Q 2 encouraging

The economic performance in the second quarter of 2009 is encouraging since the second quarter showed a better performance compared to the first quarter. Despite many challenges the estimated Gross Domestic Production (GDP) growth rate recorded 2.1 percent in the second quarter.

The three main sectors of GDP agriculture, industry and services have shown a positive trend. The industry sector showed a 3 percent growth while the services sector grew by 1.1 percent. The agricultural sector showed a growth of 4.4 percent accounting for 12.2 percent of the GDP share in the second quarter, said Director General, Census and Statistics Department, D. B. P. S. Vidyarathne.

Sub sectors such as paddy, vegetables, highland crops and livestock recorded a growth of 6 - 12 percent and this was mainly due to the positive impact on the Nagenahira Navodaya program in the Eastern province.

At a glance
* Three main sectors of GDP show a positive trend

* Positive impact on Nagenahira Navodaya program

* Trade deficit contracts to US$ 6041m in 2Q, 2009

After fishing restrictions were relaxed in the Northern and the Eastern sea belt and with the increased number of tourist arrivals there will be a better economic contribution in the second half of 2009. The liberation of the Northern and the Eastern provinces will be a key factor to accelerate economic growth, she said. The external trade sector showed a decrease due to the global downturn. The export demand for agricultural and industrial goods has shown a decline, but the balance of payment (BOP) in the second quarter has shown an improvement compared to the first quarter. However, the monetary policies of the country protected the system.

“The improvement in the stock market has reached a record position among the world stock markets and we could expect an enhanced direction while tourists arrivals are picking up in the third quarter.

With the global recovery at present, the country could expect an improved performance in the second half of 2009 and 2010”, she said.

Infrastructure development projects especially in the Northern and the Eastern provinces and other parts of the country are also remarkable. The investment rate was 23 percent in the first half of 2009 and it is estimated to be around 24 percent in the second quarter, she said.

Private remittances recorded US$ 813 million in the second quarter of 2009 and it is in excess of the trade deficit.

The trade deficit contracted to US$ 604 million in the second quarter of 2009 compared to US$ 1,715 million in the corresponding quarter of 2008. This was mainly due to the reduction of imports, which outweighed the reduction of exports, she said.

She said gross official reserves recorded US$ 1,737 million while total reserves reached US$ 3,151 million. These reserves are sufficient to finance 1.8 and 3.3 months of imports.

Director, Census and Statistics Department, G.Y.L. Fernando said the total number (excluding the Northern province) of employed persons in Sri Lanka is estimated around 7.5 million. There were 2,383,000 agricultural employees while there were 1,914,000 in the industrial sector. The services sector had 3,168,000 employees (42 percent).

There was a gradual decline according to the annual unemployment rates from 2003 - 2008. The total number of unemployment persons in the second quarter 2009 was estimated around 470,000 (6.3 percent), he said.

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