(CT) GDP rate shows positive trend

Sri Lanka has shown an improvement in vital economic indicators according to analysts.
A KPMG Report notes that Gross Domestic Product (GDP) which stood at Rs 11.8 trillion in 2016 compared to 11.0 trillion in 2015, which is an improvement. According to the Report it also indicates that the real GDP growth was recorded at 4.4% in 2016, which is slower than 4.8% growth experienced in 2015.The Report further explains that during the first half of 2017, GDP grew at 3.9 % compared to 3.7 % at the same period in 2016. Unfavuorable weather conditions that prevailed during the period hampering the agriculture sector contributed negatively towards GDP growth along with contractionary monetary policy was attributed for the decline.

However, significant growth was recorded in the industrial and services sectors, mainly driven by financial, construction, trade and other service sub-sectors it indicated. The World Bank projects the Sri Lankan economy to grow at 4.7% in 2017 and over 5.0% thereafter, mainly driven by private consumption and investment growth.In 2016, the per capita of US$ 3,835 was recorded however the Government’s target is to reach a per capita of US$ 5,000 by 2020 to drive Sri Lanka’s status to being an upper-middle income country.GDP per capita has grown at a compound annual growth rate (CAGR) of 4.2 % for the period from 2011 to 2016 and the Government expects a GDP growth of 6.0% by 2020.Sectoral composition according to the report indicates the service sector recording the highest contribution to the GDP which is 56.5 % while industry and agriculture sectors recorded 26.8 % and 7.1% respectively during 2016. The Report further highlighted the service sector contribution which has expanded by 4.2 % in 2016 compared to 5.7% in 2015 which is a decline in comparison. The industry sector has been the second largest contributor to the economy which has grown by 6.7 % in 2016 compared to 2.1% in 2015.

The significant increase in the rate was driven by construction sector growth (14.9%) as a result of the recommencement of several large-scale government projects. The industry sector also comprised mining and quarrying and manufacturing which grew by 14.4% and 1.7% respectively.

The second half of 2016 and the first half of 2017 were affected due to drought and floods which affected the agricultural sector severely ; thus the contribution to the GDP from this sector too was badly affected, thus making the sector as the least contributing sector. The drought extended its effect on hydro power reservoirs during the latter part of 2016, increasing the country’s demand for alternative sources of power. The increase in demand for crude oil was the end result of the drought in 2016. The first half of 2017 showed a drop in agricultural exports by 2.9 %.

Source: Ceylon Today

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