Sri Lanka’s economic growth contracts by 1.6% in first quarter of 2022

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The economy of Sri Lanka has contracted by 1.6 per cent in the first quarter of the year 2022.

In a press release, the Department of Census and Statistics (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.”

The department reported that the Sri Lankan economy began to improve slowly at the beginning of the year after a difficult period of the COVID-19 pandemic in 2020 and 2021. However, within the first quarter of 2022, the economic growth rate was reported to slow down compare to the first quarter of 2021 due to adverse effects of some factors such as inflation, foreign exchange devaluation and dollar deficit.

The shortage of chemical fertilizers during this period had a severe impact on agriculture productions and especially the production of rice, the country’s staple food crop, declined significantly. Thus, the agricultural economy recorded the highest decline in this quarter since 2015.

Further, restrictions imposed on fuel imports which is essential for many industries and services, have reduced the production in all manufacturing industries, including the construction industry. 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 statement is as below: