Healthy economic growth despite global financial crisis

Uditha KUMARASINGHE

The country’s economy has maintained a healthy growth rate of 1.5 percent comparatively in the first quarter of 2009 even amidst the backdrop of adverse global financial and economic development took place in the developed countries which recorded negative growth for the period reviewed.

Making the highest contribution to the overall GDP of the economy, the agriculture sector had achieved three percent growth while the industry and services sector had grown by 1.9 percent and one percent respectively during the first quarter of 2009. It is envisaged that the growth rate will pick up later in 2009 with agricultural and construction led recovery especially stemming from the resumption of economic activities in the North and East.

According to Mid Year Fiscal Position Report 2009 of the Finance and Planning Ministry, increased production of paddy, coconut, seasonal crops, fruits and vegetables and fisheries sector had added momentum for the sector in the face of the global food crisis.

Rubber production had increased by 2.7 percent to 37.9 million kilos during the period compared to 14.4 percent growth recorded in the first quarter of 2008. Coconut production increased by 29 percent to 722.2 million nuts over the negative growth of 3.6 percent recorded for the corresponding quarter of the previous year.

This was due to favourable weather conditions which prevailed and the control of ‘Weligama Wilt’ disease outbreak in the Southern Province which had an adverse impact in 2008.

Paddy production in the 2008/2009 Maha season had increased by 10.1 percent to 2.34 million metric tons compared to the 2007/2008 Maha season while the extent under cultivation increased by 8.6 percent during this period. Favourable weather condition prevailed, continued fertilizer subsidy scheme and resumption of normality in the Eastern Province which could be cited as the main contributory factors to this surge, a Finance Ministry spokesman told the Daily News.

He said most of the subsidiary food crops such as highland crops, vegetables and fruit sub sector registered a favourable growth of 6.2 percent. Food crops such as big onion, potatoes and maize production significantly increased in the review period.

According to the spokesman, the textile and apparel industry had grown by 5.4 percent as against that of 2.5 percent recorded in the reference period of 2008 despite the global economic turmoil, triggered stiff competition and uncertainty which erupted in the GSP+ scheme. The stimulus package announced by the Government also had a positive impact on the apparel sector. The announced reward scheme under the above package gave a leeway for the manufactures to operate on thin margins thereby increasing the export volumes and sustained the earnings.

Meanwhile, the construction industry had recorded a three percent growth in 2009 reflecting increased investment in public infrastructure projects such as Upper Kotmale Hydropower Project, Southern Highway, Hambantota Harbour and also private investment in the construction of 31 condominiums. Reflecting the sustained growth in the telecommunication sector, the number of fixed lines and mobile phones increased by 15 percent and 30 percent respectively during the review period as against the corresponding period of 2008.

The transport and communication sub-sector grew by 3.9 percent as against 9.4 percent recorded in 2008, he said.

Milk production had reached 103 million litres recording about a two percent increase over the period mainly benefiting from favourable producer prices and other incentives granted by the Government to revive local milk production. Fisheries sub sector had recorded a six percent growth while marine and inland fish production increased by 3.5 percent and 28.9 percent respectively in the first quarter of 2009 with the removal of restrictions imposed for fishing activities in the North and East, the spokesman said.