Economy recovers to 3.7% growth

• 2018 second quarter performance better than 3% growth a year earlier and slightly above 3.5% gain achieved in 1Q
• Agriculture rebounds with 4.5% growth as against 3.1% contraction a year earlier
• Services sector resilient with 4.8% growth in comparison to 2.7% in 2Q of 2017
• Industrial sector expands by 2.3% but far slower than 5.6% a year earlier

 The country’s economy has recovered in the second quarter to manage a 3.7% growth, higher in comparison to 3% a year earlier but marginally above 3.5% gain in the first quarter. 

The Department of Census and Statistics (DCS) in releasing National Accounts estimates for the second quarter of 2018 yesterday said that economic growth rate of the country is estimated as 3.7% for the second quarter of 2018. The Gross Domestic Product at constant (2010) prices for the second quarter of2018 recorded as, Rs. 2,264,445 million, and GDP reported for second quarter of 2017 was Rs. 2,183,122 million.

The four major components of the economy – Agriculture, Industry, Services and Tax – less subsidies on products have contributed their shares to the GDP at current price by 8.4%, 25.6%, 57.1% and 8.9% respectively.

In 2Q, Agricultural activities expanded favourably by 4.5%, compared to the contraction of 3.1% reported in the second quarter of 2017. The Industrial activities performed a slight expansion of 2.3% and Service activities expanded further by 4.8% during the second quarter of 2018, compared to second quarter of 2017.

Among the sub activities of Agriculture, ‘Growing of Cereals, ‘Growing of Rice’, ‘Growing of Vegetables’ and ‘Growing of Oleaginous fruits including coconut’ have expanded by 19.2%, 59.3%, 9.6% and 5.4% respectively recovering the heavy contractions recorded in the second quarter of 2017. 

The sub activities of ‘Growing of fruits,’ Growing of Spices,’ ‘Animal production’ and ‘Fresh water fishing’ have further expanded by 6.9%, 3.1%, 2.6% and 32.8% respectively. In the meantime ‘Growing of Tea and ‘Growing of Rubber’ reported substantial declines of 7.1% and 11.9% while a slight contraction of 0.5% is recorded for ‘Marine Fishing’.

The Industrial activities which share one fourth of the GDP in the second quarter of2018, expanded by 2.3%. The manufacturing sector alone has expanded further by 3.2% during this period, supported mainly by the sub activities of ‘Manufacture of food, beverages and tobacco,’ ‘Manufacture of textile and wearing apparels,’ ‘Manufacture of coke and refined petroleum products,’ ‘Manufacture of basic metals and fabricated metals’ and ‘Manufacture of furniture,’ which recorded positive growth rates of 5.2%, 1.9%, 22.4%, 6.3% and 5.9% respectively. 

The ‘Construction’ activity, one of the main contributors, to the total GDP, grew moderately by 1.4% in this quarter compared to the 6.0% growth recorded in the second quarter of 2017. The sub activity of ‘Electricity gas, steam and air’ reported a considerable growth of 2.3% in the second quarter of 2018.

Three-fifth of overall GDP is shared by the service economy of the country recorded an expansion of 4.8% in the second quarter of 2018, when compared to the same quarter in year 2017. Performance of the service activities were strengthened by the sub activities of ‘Wholesale and retail trade,’ ‘Accommodation, food and beverage services,’ ‘Telecommunication services,’ ‘Information Technology services,’ ‘Financial services,’ ‘Insurance services,’ ‘Real Estate activities’ and ‘Other personal service’ expanded by 4.9%, 6.4%, 14.4%, 9.0%, 12.0%, 11.0%, 3.7% and 4.8% respectively compared to the second quarter of 2017. The activity of ‘Programming and broadcasting’ contracted substantially by 15.5% within this quarter compared to the respective quarter in 2017.

DCS stated that a detailed report on the National Accounts estimates for the second quarter of 2018 has been published in the DCS website: www.statistics.gov.lk.