GDP contracts 1.6per cent in 1Q

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Sri Lanka’s gross domestic product (GDP) contracted 1.6 per cent during the first quarter of this year according to the Department of Census and Statistics, which said the economy reached Rs 3.46 trillion from Rs 3.52 trillion a year ago.

During the first quarter of last year, Sri Lanka’s economy posted a growth of four per cent.

Agriculture and Industrial sectors recorded contractions of 6.8 per cent and 4.7 per cent respectively while the Service sector recorded an expansion of 0.7 per cent, when compared to these values with the first quarter of year 2021.

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 per cent, 31.1 per cent and 55.6 per cent respectively, while ‘Taxes less subsidies on products’ component has contributed 5.2 per cent of share to the GDP in the first quarter of 2022.

The Sri Lankan economy began to improve slowly during the beginning of 2022, after a difficult period of the Covid-19 pandemic in 2020 and 2021, with new expectations of economic recovery.

However, within the first quarter of 2022, the economic growth rate was reported to slow down compared to the first quarter of 2021 due to adverse effects of inflation, foreign exchange devaluation and dollar deficit.

The shortage of chemical fertiliser during this period had a severe impact on agriculture productions and especially the production of rice.

Restrictions imposed on fuel import, which is essential for many industries and services, have reduced the production in all manufacturing industries, including construction.

Despite all the adverse conditions that prevailed in the country, service activities recorded a mild increase in the first quarter of 2022, when compared to the first quarter of 2021.

By Mario Andree