SL economy shrunk 1.6% in Q1

The economy of Sri Lanka contracted by 1.6% in the first quarter of 2022, the Department of Census and Statistics (DCS) stated yesterday (29).

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%, 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, 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 a dollar deficit, the DCS explained.

The shortage of chemical fertilisers during this period had a severe impact on agriculture production, and the production of rice in particular declined significantly. 

“Thus, the agricultural economy recorded the highest decline in this quarter since 2015,” the DCS said.

In addition, the restrictions imposed on importing fuel, 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 prevailing in the country, service activities recorded a mild increase in the first quarter of 2022 when compared to the first quarter of 2021.  

The Gross Domestic Product (GDP) 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% in the GDP growth rate in the first quarter of 2022 against the 4.0% 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%.

 

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%, 31.1%, and 55.6%, respectively, while the “Taxes less subsidies on products” component contributed 5.2% 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% and 4.7%, respectively, while the service sector recorded a trivial expansion of 0.7%, when compared to the values in the first quarter of 2021.

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