Increase in employment despite supply-side inflation shows economic resilience: Governor

28 November 2017 12:00 am - 0     - {{hitsCtrl.values.hits}}

A A A

By Chandeepa Wettasinghe

The weakening of theoretical economic relationships during a time of crisis shows the resilience in Sri Lanka’s economy, according to Central Bank Governor Dr. Indrajit Coomaraswamy.


“A lot of these economic relationships now seem to be getting weaker,” he told Mirror Business earlier this month, while commenting on the recent increase in employment, despite inflation increasing due to supply-side pressures.


Economic theories suggest that when there is increased inflation stemming from the supply side, employment falls, while the opposite occurs when higher inflation results from an increase in demand. 


Despite inflation remaining stubbornly at the 6-8 percent range due to weather-related supply disruptions, above the 4-6 percent range desired by the Central Bank, the number of Sri Lankans employed during the second quarter of this year increased by 4.1 percent year-on-year (YoY) to 8.1 million. Unemployment too edged down to 4.5 percent from 4.6 percent YoY. Dr. Coomaraswamy said that increasing self-employment may provide some explanation.


“There’s a lot of self-employment and a lot of little entrepreneurial activity going on, which is a good thing. There seems to be resilience in the economy,” the governor said.


Increased employment during the second quarter of this year stemmed from agricultural and industrial activities.


Dr. Coomaraswamy too repeated what Mirror Business had reported earlier, that the increased employment in agriculture may have been a result of a base effect—such as a dip in employment in agriculture 12 months ago.


Such a trend was indeed witnessed in the second quarter of 2016 due to floods and landslides, which resulted in a dip in employment in the agriculture sector.
Floods and landslides had affected crops in the wet-zone paddy farming, tea, rubber and palm oil industries.


Despite the increased employment in agriculture by the end of the second quarter of this year, the economic output of these industries had contracted, except for tea, where production increased by 3 percent.


The ‘lot of entrepreneurial activity’ may offer some explanation, since some social science academics have suggested that many who have classified themselves as employed in the agriculture may in fact be engaging in other economic activities such as driving three-wheelers. 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 

 

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




Bio Bubble Bursts on tissa safari drivers

Ukrainian tourists are visiting Sri Lanka at present with the involvement of

Army’s LRRP Ambush of LTTE’s Military Intelligence Chief

A news report in the Dailymirror last August stated that the Long Range Recon

“I don’t think Sri Lankans can be realistically ruled by force” -Ahimsa Wickrematunge

Twelve years after the assassination of Lasantha Wickrematunge, the founding

Decisions to be made in Sri Lanka’s hunt for the COVID-19 Vaccine

Around the world, governments are gearing up to roll out nationwide immunizat

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.