The year-on-year GDP growth rate for the second quarter contracted by 8.4 percent against the corresponding quarter in 2021, the Department of Census and Statistics (DCS) releasing the national accounts estimates on Thursday stated.
The economy contracted by 1.6 percent in the first quarter this year.
According to the DCS, GDP at constant price (2015) for the second quarter had declined to Rs. 2,782,114 million from Rs. 3,038,855 million recorded in the same quarter of 2021.
However, the GDP at constant price (2015) reported in the second quarter of 2022 is higher than the GDP at constant price reported in the second quarter of 2020 which is estimated at Rs. 2,612,069 million.
In the second quarter this year the year on year GDP growth rate is calculated based on the real GDP value reported in the second quarter of previous year. The Gross Domestic Product for Sri Lanka for the second quarter of 2022 at current price has increased up to Rs. 5,374,716 million from Rs. 4,032,171 million recorded in the same quarter in 2021 registering 33.3 percent of positive change in the current price GDP.
The three major economic activities of the economy; ‘agriculture’, ‘industry’ and ‘services’ have contributed their share to the GDP at current prices by 10.2 percent, 32.0 percent and 49.4 percent while ‘Taxes less subsidies on products’ component has contributed 8.4 percent of share to the GDP in the second quarter of year 2022.
During the quarter, all three major economic activities of agriculture, industrial and services activities recorded negative growth rates of 8.4 percent, 10.0 percent and 2.2 percent.
The pandemic began at the end of first quarter of 2020 in the country and throughout the past seven quarters it emerged from time to time and has made destructive conditions on economic activities. The same effect has been made even in the second quarter in 2021 which is the comparative quarter with the second quarter of this year.
However, the pandemic had minimal impact on the quarter under review in this year, although many economic activities could not continue their businesses as usual due to the prevailing uncertain operating environment and civil unrest conditions.
Specially power disruption, fuel shortage, supply chain disruptions in importing required materials including cement, shortages in supply of fertiliser and chemicals, disruptions in goods and passenger transport and the lower demand made in non-essential services due to the high inflation have made destructive conditions on agriculture, industry and services activities during the period under review.
As a result, many economic activities have been threatened severely; such as growing of cereals, growing of paddy, growing of vegetables, growing of tea, growing of rubber, marine fishing industry, mining and quarrying industry, construction industry, manufacturing industry specially including manufacture of food and beverages, goods and passenger transportation, information technology services, real estate activities, professional services and human health services.
Many economic activities were threatened directly or indirectly due to this uncertain operating environment. Hence, during this quarter, the total output of agriculture and industrial activities was reduced whilst reporting a decline in the demand for services, during the quarter under review.
In the second quarter of year 2022, the agriculture activities contracted by 8.4 percent when compared to the 11.2 percent of positive growth recorded in the same quarter in the year 2021. The contraction in the agriculture activities were mainly driven by the ‘Growing of cereals’ (32.3 percent), ‘Growing of tea’ (19.7 percent), ‘Growing of paddy’ (15.6 percent), ‘Marine fishing’ (15.3 percent), ‘Growing of rubber’ (13.7 percent), ‘Animal production’ (13.6 percent) and ‘Growing of vegetables (13.2 percent).
However, during this quarter, ‘Fresh water fishing’ (11.2 percent), ‘Plant propagation and agriculture supporting activities’ (10.8 percent), ‘Growing of Oleaginous fruits; including Coconut’ (10.5 percent), ‘Forestry and logging’ (9.0 percent), ‘Growing of perennial crops’ (3.5 percent), ‘Growing of spices’ (3.2 percent) have reported positive growth rates. In the second quarter of 2022, the overall industrial activities have reported a shrinkage of 10.0 percent compared to the high growth of 21.6 percent reported in the same quarter in the previous year.
The overall manufacturing industry contracted by 5.3 percent during the quarter under review. However, one of the major manufacturing industries the ‘Manufacture of textiles, wearing apparel and leather related products’ has reported a massive expansion of 28.2 percent during this quarter when compared with the comparative quarter of year 2021.
Other main manufacturing industry of ‘Manufacture of food, beverages and tobacco products’ has reported a decline in the industry by 11.0 percent. ‘Manufacture of coke and refined petroleum products’ (78.0 percent), ‘Manufacture of wood and products of wood’ (40.1 percent), ‘Manufacture of basic metal and fabricated metal products’ (28.6 percent), ‘Manufacture of other non-metallic mineral products’ (28.4 percent), ‘Manufacture of rubber and plastic products’ (17.7 percent) have reported negative growth rates during this quarter. In the meantime, ‘Manufacture of paper products’ and ‘Manufacture of furniture’ have reported positive growth rates of 3.3 percent and 0.2 percent.
Among the ‘Industrial activities’, the ‘Construction’ activity, which corresponds to 9.5 percent of share to the GDP, has recorded 16.2 percent of decline during the second quarter of year 2022. The ‘Mining and quarrying’ activity which shared the GDP at 2.0 percent recorded 26.7 percent of negative growth rate.
‘Electricity, gas, steam and air conditioning supply’ activity has reported positive growth rate of 1.5 percent and the ‘Water collection, treatment and supply’ activity has recorded 20.6 percent of positive growth rate in this year.
During the second quarter of year 2022, the performance of the Service sector has shrunk by 2.2 percent when compared to the same quarter of year 2021.
During the quarter under review, the ‘Financial service activities’ and ‘Insurance services’ reported a shortfall of 19.5 percent and 16.8 percent. In addition, ‘Professional services’ (9.7 percent), ‘Programming and broadcasting activities’ (8.4 percent), ‘Human health services’ (7.5 percent), ‘Ownership of dwelling and real estate activities’ (6.0 percent) ‘Goods and passenger transport and warehousing activities’ (0.7 percent) have reported negative growth rates.
The ‘IT programming consultancy and related activities’ which corresponds to 1.9 percent of share to the GDP, has reported 4.3 percent of contraction in the industry during the second quarter of year 2022 when compared to the comparative quarter in the previous year. The electricity and power disruption, fuel shortage, forex regulations, uncertain operating environment and civil unrest have been caused significantly for this drawback.
However, among the services related activities ‘Accommodation, food and beverage serving activities’ (35.3 percent), ‘Postal and courier services’ (11.7 percent), ‘Telecommunication services’ (8.6 percent), ‘Educational services’ (5.0 percent), ‘Other personal services’ (2.0 percent) and ‘Wholesale and retail trade’ (1.7 percent) have reported positive growth rates during the second quarter of 2022.