ADB Lowers SL’s Growth Forecast to 3.4%
By Mario Andree
The Asian Development Bank lowered Sri Lanka’s economic growth expectations for this year to 3.4 per cent from 4.1 per cent forecast a year earlier, after the agency lowered the forecast for Asia to 7.1 per cent from 7.3 per cent. The Bank also lowered the country’s growth forecast for next year to 3.4 per cent from the 3.6 per cent predicted earlier. However, the Central Bank is hoping that the Sri Lankan economy would grow at five per cent this year despite the recent lockdowns imposed to curb the third wave of the pandemic.
Sri Lanka’s gross domestic product (GDP) grew at eight per cent during the first six months (1H) of this year, according to data released by the Department of Census and Statistics. The Sri Lankan economy has posted a 12.3 per cent growth during the second quarter (Q2) of this year, after posting a growth of 4.3 per cent during the first quarter (Q1). Last year, the economy during e second quarter contracted 16.3 per cent, after a contraction of 1.6 per cent during the first quarter.
According to the Department, Agriculture posted a growth of 7.1 per cent during the first six months of this year, while the Industrial Sector grew at 12.1 per cent and the Services Sector at 5.1 per cent. During the second quarter of this year, Agriculture posted a growth of 8.1 per cent during the first six months of this year, while the Industrial Sector grew at 22.1 per cent and the Services Sector at 7.5 per cent. The three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ have contributed their share to the GDP at current prices by 9.2 per cent, 27.0 per cent and 57.9 per cent respectively, while ‘Taxes less subsidies on products’ component have contributed 5.8 per cent of share to the GDP in the second quarter of 2021.
The four major components of the economy, Agriculture, Industry, Services and Taxes less Subsidies on products have contributed their shares to the GDP at current price by 7.8 per cent, 29.2 per cent, 57.4 per cent and 5.7 per cent respectively during the first quarter of this year. Sri Lanka’s gross national income (GNI) grew 4.9 per cent to Rs 4.43 trillion during the first six months of this year from Rs 4.27 trillion a year ago.
The gross national income during the second quarter of this year grew 15 per cent to Rs 2.11 trillion from Rs 1.83 trillion a year ago. Sri Lanka’s gross national income grew 4.9 per cent to Rs 2.33 trillion during the first quarter of this year from Rs 2.22 trillion a year ago. The Sri Lankan economy in 2020 posted a contraction of 3.6 per cent making it the worst financial year in the country’s history. According to the State statistics office, Sri Lanka’s gross domestic product (GDP) reached Rs 9.53 trillion in 2020, down 3.6 per cent from Rs 9.88 trillion recorded in 2019. The COVID-19 pandemic, which worsened the effects of the tragic Easter Sunday incident, is expected to cost the country, with many sectors, mainly tourism, being affected heavily.