- Need arises with SL recording economic contraction in 1Q, surprising many
The Central Bank is looking at employing new methodologies or updating the existing ones, which will contain the ability to capture economic activities that shifted online including working-from-home, as concerns were raised over how the economy recorded a contraction in the first quarter.
To this end, the Central Bank and the Department of Census and Statistics (DCS) are in talks to see whether they can come up with a methodology, which is both scientific and transparent to collect and measure economic activities that moved to becoming digital and virtual, specially
during the coronavirus lockdowns. The Sri Lankan economy reported a contraction of 1.6 percent in the first quarter, when only 10 days of the quarter were offline, to the surprise of many.
“During a period of normal economic activities, the matrices used (when measuring the economic output) are correct. But use of regular matrices to measure the economic activities during unusual times could result in weaknesses,” the Central Bank Senior Deputy Governor
Dr. Nandalal Weerasinghe said.
He however said this is not a weakness only affecting Sri Lanka.
Dr. Weerasinghe was responding to a question if the DCS’ economic data for the first quarter had captured economic activities such as work-from-home arrangements and other activities which rapidly shifted online with the lockdowns.
A large number of office based workers started working from home after curfew was imposed on March 20 and companies, including the State sector encouraged and facilitated them to do so.
Even today, after three months of the lifting of the lockdowns employees of certain companies, particularly in knowledge process outsourcing sector, are still operating from home.
“We may not have had ways of measuring work done from home and what kind of value addition came from it as these are difficult tasks, which cannot be quantified in a short period of time. And this is why we think, there could be a difference between the economic output which we foresaw and the economic output which was measured as there could be an element of activities which weren’t got captured,” Dr. Weerasinghe stressed.