Sri Lanka’s economy has expanded by 5.5 percent during the first quarter of 2016 from a year ago largely supported by the strong growth in the industrial activities, which picked up by 8.3 percent, as the country’s construction activities resumed after a hiatus of almost a year, the data released by the statistics office showed.
According to the Census and Statistics Department, the first quarter gross domestic product (GDP) was measured at Rs.2,088,024 million in comparison to Rs.1,978,609 million recorded during the corresponding quarter in 2015.
The construction sector contribution, which narrowed to 6.8 percent of GDP by the end of 2015, picked up by 12.0 percent during the quarter. Construction – a sub-sector under the industry sector – had a 7.2 percent share of GDP in 2014 due to the post-war renaissance of infrastructure development activities but was disturbed after January 1, 2015, when the good governance regime stalled major infrastructure projects pending clearance from alleged corruption associated with them.
Sri Lanka’s first quarter GDP growth still remains strong amid the challenges in both domestic and hostile global economic development.
This is also fairly in line with the expectation of the Central Bank, which wants to grow the economy between 5.5 percent and 6.0 percent in 2016.
However, the country last week received an International Monetary Fund (IMF) life line - a US $ 1.5 billion reform - heavy extended fund facility - which is expected to put the economy back on track.
The IMF projects the Lankan economy to grow no more than 5.0 percent during the three years to 2018 before edging up to 5.2 percent in 2018 and 5.4 percent in 2020.
The sectoral composition of the Lankan economy showed the industry sector has increased its share up to 31.6 percent, while the services sector had a share of 52.4 percent recording a 4.9 percent growth.
The agriculture sector has grown by a paltry 1.9 percent and the sector’s share is only 7.4 percent. In the agricultural sector, the sub-segment, growing of tea, narrowed by 11.6 percent, while growing of rubber slipped by 2.6 percent.
Economists call a structural shift in the economy as one-third of the labour force engage in the agricultural sector, which contributes less than 10 percent to the economy.
It is also argued that the country has bypassed the crucial industrialization phase and reached a service economy status at the cost of the country becoming highly import reliant.
In the service sector, financial services activities have grown by 15.9 percent, while wholesale and retail trade grew by 5.7 percent over the corresponding period last year.