ECONOMYNEXT – Sri Lanka’s economy grew 3.7 percent in the first quarter of 2019 from a year earlier, helped by the agriculture sector returning to normalcy, the state statistics office said.
The agriculture sector grew 5.5 percent from a year earlier, while the industrial sector grew 3 percent and services 4.1 expanded percent, the Department of Census and Statistics (DCS) said.
The implicit GDP price deflator was only 0.06 percent in the period, keeping nominal and real GDP almost the same.
Sri Lanka is recovering from a balance of payments crisis triggered by a soft-pegged exchange rate regime and weak demand has kept prices low, while agricultural prices have also fallen amid a production recovery. Inflation from the currency fall, tends to show up later as the economy recovers, analysts who study Sri Lanka’s frequent balance of payments crises have said.
But the agriculture sector had continued to feel the tail-end effects of the two-year long drought in the first quarter of 2018, and the growth in the first quarter of 2019 reflects the end of weather anomalies, the statistics office said.
The highest growth in agriculture came from coconut, with the crop up up 35.6 percent from a year earlier.
There was low coconut supply in the first quarter of 2018, as crop growing was battered by the drought in 2017. Supply of coconuts returned to normal later in of 2018.
Meanwhile, paddy farming grew 13.1 percent in the first quarter of 2019, as it had shown some recovery a year earlier as well.
"Animal production, growing of fruits, plant propagation activities and support services to agriculture and growing of vegetables recorded substantial growth rates," the statistics ofice said.
Cereal crops fell 12.9 percent, as a fall armyworm infestation hit maize.
Fishing and tea growing recorded contractions during the quarter.
The industrial sector grew with manufacturing of coke and refined petroleum products rising 94.8 percent, as the country’s sole refinery in Sapugaskanda had been closed for over a month a year earlier.
Construction and mining and quarrying activities grew 6.9 percent and 5.8 percent respectively
In services, telecommunications, and IT programming consultations and related activities expanded at 15.1 percent and 11.7 percent respectively, due to a growing IT/BPO industry.
Other service activities also recorded growth.
Fastest growth was seen in financial services, up 9.8 percent, programming and broadcasting activities up 8.1 percent and insurance and pension funding activities up 8 percent.
Accommodation and food and beverage activities grew 4.5 percent, while wholesale and trade grew by 4.4 percent.
Analysts say that economic growth will fall sharply in the second quarter of 2019, as the country was hit by the Easter Sunday terror attack (Colombo/Jun19/2019- Updated at 20:54)
