Sri Lanka’s economy contracts by 1.6% in first quarter of 2022
The economy of Sri Lanka contracted by 1.6 percent in the first quarter of the year 2022, the Department of Census and Statistics (DCS) says.
In a press release, the DCS said “the year-on-year Gross Domestic Product (GDP) growth rate for the first quarter of the year 2022 is estimated as negative 1.6 percent which indicated a considerable contraction of the economy compared to the first quarter of 2021.”
At the beginning of 2022, the Sri Lankan economy began to improve slowly, following a difficult period of time due to the Covid-19 pandemic in 2020 and 2021, with new expectations of economic recovery, the statement read further.
However, unfortunately, within the first quarter of 2022, the economic growth rate was reported to slow down compared to the first quarters of 2021, as a result of the adverse effects of some factors such as inflation, foreign exchange devaluation and dollar deficit, the DCS explained.
The shortage of chemical fertilizers during this period had a severe impact on agriculture production and especially the production of rice declined significantly. “Thus, the agricultural economy recorded the highest decline in this quarter since the year 2015.”
In addition, the restrictions imposed on fuel import which is essential for many industries and services, have reduced the production in all manufacturing industries, including the construction industry as well.
Accordingly, the industrial sector has also reported a significant decline in the first quarter of 2022.
However, despite all the adverse conditions prevailed in the country, service activities recorded a mild increase in the first quarter in 2022 when compared to the first quarter of 2021.
The Gross Domestic Product of Sri Lanka for the first quarter of 2022 at constant (2015) price reported as Rs. 3,463,101 million, compared to Rs. 3,519,921 million recorded in the first quarter of 2021, which recorded a decline of 1.6 percent in the GDP growth rate in the first quarter of 2022 against the 4.0 percent of incline reported in the first quarter of 2021.
Further, the GDP at current price for the first quarter of 2022 has increased up to Rs.5,368,465 million from Rs.4, 573,080 million recording a positive change of 17.4 percent.
The three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ have contributed their share to the GDP at current prices by 8.1 percent, 31.1 percent and 55.6 percent respectively, while ‘Taxes less subsidies on products’ component has contributed 5.2 percent of share to the GDP in the first quarter of 2022.
Meanwhile, in the first quarter of 2022, Agriculture and Industrial sectors recorded contractions of 6.8 percent and 4.7 percent respectively while Service sector recorded a trivial expansion of 0.7 percent, when compared to these values with the first quarter of year 2021. (AdaDerana)