Agriculture sector performs well in ’12

Despite adverse weather conditions in the second half of the year, the Agriculture sector performed better in 2012 than in 2011.

Reflecting the expansion in economic activities, the unemployment rate declined to 4 percent in 2012 from 4.2 percent in 2011 according to Governor Central Bank Ajith Nivard Cabral. He disclosed this at the presentation of the 63rd Annual Report of the Monetary Board in Colombo recently. The Agriculture sector grew by 5.8 percent in 2012, recovering from a slow growth of 1.4 percent in 2011, amidst drought conditions in the third quarter of the year and heavy monsoonal rains and floods in the latter part of the year. The favourable weather conditions that prevailed in the early part of the year produced a bountiful paddy harvest in the Maha season, contributing to the recovery of the paddy despite the significant setback in paddy production in the Yala season due to adverse weather conditions.

The performance of the agriculture sector was also driven by the improvement in vegetable production, highland crops, livestock and a significant increase in fish production during the year.

The fisheries sub sector also contributed significantly towards the growth in the Agriculture sector while milk production supported by concerted efforts by the government to promote the dairy industry. In the export agricultural sector, coconut production increased largely due to the lag effect of favourable weather conditions that prevailed in major coconut growing areas.

However, tea production was adversely affected by the drought while rubber production declined due to the torrential rainfall.

Within the minor export crops sector, pepper production increased significantly while the production of cinnamon and cloves declined in 2012. Most agricultural commodities benefited from the favourable prices that prevailed in 2012. The Industry sector grew by 10.3 percent, contributing substantially to the expansion of the economy in 2012.

The sustained increase in construction activities, which accelerated the growth momentum of the construction sub sector spurred the growth in the Industry sector.

The continuation of major government funded infrastructure development projects and increased construction activities of the private sector, including tourism related new construction and renovation activities, contributed to this growth.

A high level of activity in the construction sector bolstered demand for minerals and construction material enabling the mining and quarrying sub sector to increase its share in GDP.

Manufacturing, the largest sub sector within the industry sector, decelerated in terms of value added growth due to subdued domestic and external demand.