GDP value tops Rs. 2.6 trillion

The value of country’s Gross Domestic Product (GDP) crossed the Rs. 2.6 trillion mark in 2010 registering a second highest ever annual growth of 8%.The Department of Census and Statistics revealed yesterday that the economic output of Sri Lanka as measured by GDP for the year 2010 at constant (2002) prices is estimated at Rs. 2,645.4 billion as against Rs. 2,449.2 billion in the previous year, registering an 8.0% growth rate as against 3.5% growth in the previous year.

“This impressive high growth is more important for the country’s economic progress and it is the second best GDP growth ever achieved since independence,” the Department of Census and Statistics said. “The highest-ever achieved GDP growth in the history of the country was 8.2%, and it was recorded in the years  1968 and 1978,” it added.

The three major sectors of the economy – Agriculture, Industry and Services – registered significant growth as 7.0%, 8.4% and 8.0% respectively, in 2010 over the previous year. Of these, Industry and Services sectors grew unprecedentedly, marking the highest-ever growth since 2002.

The sub sectors which registered relative significant growth among the major sectors in the reference year are Tea 13.1%, Rubber 12.7%, Minor Export Crops 37.6%, Paddy 17.5%, Fishing 12.2%, Mining and Quarrying 15.5%, Construction 9.3% , Electricity Gas & Water 7.8%, Wholesale & Retail Trade 7.5%, Hotels & Restaurant 39.8%, Transport & Communication 11.9%, and Banking, Insurance & Real Estate 7.5%.

However, the growth of the Coconut sub sector dropped by (-) 14.3% in 2010 as against previous year. The Livestock Production, Other Food Crops (Highland Crops, Vegetables, and Fruits) , Firewood & Forestry and Gas in 2010 have recorded relatively slow growth constituting 2.9%,4.4%, 3.1%, and 4.6%, as against the previous year.

The percentage share of the three major sectors, namely the Agriculture, Industry and Services, to the total GDP constituted 11.9%, 28.8% and 59.3% respectively. The year-on-year inflation as measured by Colombo Consumers’ Price Index is recorded as 5.9% in 2010, whereas it was 3.4% in 2009. The index number of GDP implicit price deflator rose to 211.8 in 2010, from 197.4 in 2009, registering inflation rate as 7.3% for the year 2010.

The GDP per-capita at market prices is estimated at Rs. 271,259 (US$ 2,399) in 2010 as against Rs. 236,445 (US$ 2,057) for the previous year depicting a growth of 14.7% for the rupee value and 16.6% for the US$ value.

Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs. billion 3,684.7 in 2010 as against Rs. billion 3,116.2 in 2009. Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs. billion 1,452.0 in 2010 as against Rs .billion 1, 147.4 in 2009. The corresponding share of GFCF to the GDP is 25.9% in 2010 and 23.7% in 2009.

Gross Savings at current prices in 2010 is estimated at Rs. 1,360.1 billion as against Rs. 1,141.5 billion in 2009 constituting 24.3% of GDP as against 23.6% in the previous year.

Agriculture sector

The Agriculture, Forestry and Fishing sector showed a 7.0% growth in 2010 as against the growth of 3.2% the year before. The growth rate of Tea is registered as 13.1% for the year 2010 as against (-) 8.4% for the year 2009, attributed to the recovery in tea production which had been dropped in 2009. The favourable weather conditions during the period of January to September in 2010 also supported this growth. However, tea production decreased by 1.0% in Q4 2010 owing to unfavourable weather conditions.

The value added of rubber production grew by 12.7% in 2010 as against the 7.9% for the last year. The major reasons for this growth was due to the increase in average price of rubber (at the Colombo auction) which rose to Rs. 397.70 per kg in 2010 from 201.66 per kg in 2009 indicating 97.2% price increase.

This price increase enthused over the maintenance of rubber estates and tapping activities which eventually propped up the growth. The value addition of coconut production showed a 14.3% decrease in 2010 although it grew by 5.3% in the previous year. Low rainfall in 2009, onset of pest and outbreak of diseases and low humidity in major coconut cultivating areas were identified as root causes to such a decline.

The growth rate of Minor Export Crops (MEC) was recorded as 37.6% in 2010 whereas it was 5.2% for the previous year. The export quantities of cloves, sesame seeds and cashew nuts have increased by 206.6%, 438.8%, and 94.7% respectively in the reference year.

Paddy grew by 17.5% in 2010 as against the negative growth of 5.1% in 2009. The gross extent sown and gross extent harvested increased by 9.0%, and 12.5% respectively in 2010 over the previous year. The higher paddy prices, adequate water supply, resumption of cultivation in paddy fields – especially in Northern and Eastern Provinces, which had been forbidden cultivation for years by the war, and pro-agricultural policies such as fertiliser subsidy, guaranteed paddy prices, etc., were the major driving forces for the growth of paddy production.

The sub sector of Livestock Production grew by 2.9% in 2010. The restored peace across the country supported the growth of livestock farming, especially in the east. The North Central Province was able to increase livestock production.

The overall fishing industry grew by 12.2% in 2010. Of these Inland Fishing grew by 10.1% and Marine Fishing grew by 12.5%. The expansion of breeding fish distribution to tanks, the development programmes currently being operated for inland fishing in the north, better management practices in the inland fishing industry and resumption of inland fishing in Mannar and Vavuniya Districts supported the outstanding growth of inland fish production.

The satisfactory growth of the marine fishing industry has been supported by the relaxation of restricted fishing time and fishing areas in the north, higher fish production in Northern and Eastern Provinces and the progress made in fishing industry related infrastructure facilities.

Industry sector

In real terms, Value Added of the industry sector grew by 8.4% in 2010 as against 4.2% growth in 2009. Manufacturing, which is the largest sub sector of the industry sector, grew by 7.3% in 2010. The growth rate of gem mining recorded 7.9% in 2010. Export quantities of both the precious stones and semi-precious stones increased by 4.7% in the reference period.

The Factory industry grew by 7.5%. The higher growth of factory industry has been supported by Chemicals, Petroleum, Rubber and Plastic Products by 12.2%, Non-Metallic Mineral Products by 10.4%, Fabricated Metal Machinery & Equipment by 8.2% and Textile, Wearing Apparel & Leather Products by 5.2%.

The growth rate for the sub sector of Electricity, Gas and Water is 7.8% for the reference year as against 3.7% growth in 2009. The overall electricity generation grew by 8.4% during the reference year, while hydro power generation recorded a 46.4% growth and thermal power generation recorded a (-) 16.4% growth.

In real terms, the Construction sub sector indicated a 9.3% growth for the year 2010 and it was 5.6% for the previous year. This growth was supported by the introduction of new development projects, the large scale projects already in operation and the operated rehabilitation and resettlement programmes, especially in Northern and Eastern Provinces.

Total cement production has increased to 3,749,005 MT in 2010 from 3,212,865 MT in 2009 indicating a 16.7% increase; the disbursement of loan for constructions of houses, business premises, other buildings and property developments increased by 39.6% during the reference year.

Service sector

The overall Service sector marked 8% growth in 2010 as against 3.3% growth in the year 2009 making the highest-ever growth in the annual series, since 2002. The recorded high growth in the reference year has been boosted by the promising higher growth of its major sub sectors such as, Hotels and Restaurants by 39.8%, Transport and Communication by 11.9%, Banking, Insurance and Real Estate by 7.5% and Wholesale and Retail Trade by 7.5%.

The Export Trade sector grew by 3.4% at constant prices for the year 2010. According to the Balance of Payment (BOP) Statistics of Central Bank of Sri Lanka (CBSL), exports earnings increased to Rs. 937,737 million in 2010 from Rs. 813,911 million in the year 2009, indicating a 15.2% increase. According to trade indices of CBSL, export volume and export price level increased by 3.7% and by 11.1% respectively during the reference period.

The Import Trade sector grew by 9.5% in the reference period as against 8.2% drop in the previous year. Total expenditure for imports increased to Rs. 1,528,171 million in 2010 from Rs. 1,172,618 million in the year 2009 recording a 30.3 increase. According to the trade indices of CBSL, the import volume and import prices increased by 11.6% and by 16.7% respectively in 2010 over the previous year.

Domestic Trade sub sector grew by 7.6% in the year 2010. This was mainly due to the higher agricultural and industrial productions which mostly consume the domestic market. Higher production of paddy and fish, which are mostly consumed locally, are the major driving forces to higher growth of domestic trade.

The Hotels and Restaurants sector recorded 39.8% higher growth in 2010 as against the growth rate of 13.3% for the last year. Tourist arrivals increased to 654,476 in 2010 from 447,890 in 2009, contributing a growth of 46.1% for the reference year. It is the highest-ever recorded number since 1969. The major reason for these increments is the prevailing peace across the country. Tourist earnings increased by 62.0% and room occupancy rate increased to 70.1 in 2010 from 48.4 in 2009.

Transport & Communication sector indicated 11.9% growth as against that of 6.3% growth in the previous year. The Passenger and Goods Transportation, Cargo Handling and Posts and Telecommunication sub sectors grew by 11.4%, 16.8% and 13.2% respectively.

The total number of new registrations of vehicles increased by 76.0% in the reference year, as against a 23% decline in the previous year. Registration of buses, three-wheelers and goods transport vehicles increased by 237.1% 129.2% and 40.1% respectively in 2010. The boom of new registration of vehicles has been chiefly fuelled by the reduction of import duty with effect from June 2010.

Both passenger income and passenger kilometres flown by SriLankan Airlines increased by 25.3% and 19.7% respectively in 2010. Total telephone connections increased by 17.6% in this year due to expansion of telecommunication services, especially in the newly-liberated areas of the Northern Province and the introduction of new connections with advanced technology which attracted customers.

The Banking, Insurance & Real Estate sector grew by 7.5% in 2010, as against the growth of 5.7% in the year 2009. Loans and advances increased rapidly in the year 2010, compared with previous year.