Sri Lanka’s rebased GDP grows at 6.7% in 2Q15

17 September 2015 02:40 am - 0 - {{hitsCtrl.values.hits}}

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Sri Lanka’s gross domestic product (GDP) during the April-June quarter (2Q15) grew by 6.7 percent from the same quarter last year with all three pillars of the economy—agriculture, industry and services—performing better, the Census and Statistics Department (DCS) data showed. The notable feature is that the 2Q15 GDP was the first time the Census Department rebased the country’s GDP to year 2010 from the earlier used year 2002.
Under the rebased national accounts, the 2Q15 GDP improved from Rs.1.93 trillion to Rs.2.06 trillion.
The services sector was the fastest to grow at 7.9 percent year-on-year (YoY) while the agriculture, forestry and fishing activities grew by 5 percent and industry by 2 percent.
The share of the contribution from the three pillars is also led by the services sector with 61.2 percent followed by industry and agriculture with 23.5 percent and 7.5 percent, respectively.
The new and the fourth sector included following the rebasing exercise, ‘taxes less subsidies on products’ had a share of 7.9 percent, a growth of 14 percent from last year. Sri Lanka’s GDP in the January-March quarter (1Q15) grew at 6.4 percent but the numbers are not comparable because of the change in the base year.
“Rebasing of the GDP is a region-wise exercise based on the International Monetary Fund’s instructions issued in 2011,” said the Director General at the department, Dr. A.J. Satharasinghe.

Rebasing of Sri Lanka’s national data would further happen based on 2013 as the base year from 2016 as the 2013/14 countrywide economic census provides most up-to-date information on the structural changes of the economy, Dr. Satharasinghe further said.
“Rebasing the GDP is an exercise which brings the comparison of the current GDP estimates to the closest picture of reality as possible,” the DCS said in a statement.
The rebased data shows the Sri Lankan economy growing by just 4.5 percent in 2014 and 3.4 percent in 2013 against the previously reported 7.4 percent and 7.2 percent, respectively.
The GDP deflator used for the estimation is 3.2 percent – i.e. there has been an inflation of 3.2 percent from the 2Q14 till the 2Q15. This is much higher than the increase in the Colombo Consumer Price Index of 0.07 percent (inflation) during the same period.
A closer look into the sub-activities in the agricultural sector showed, growing cereals and rice rose by 24 percent and 66.2 percent, recording the highest growths YoY. But growing tea and rubber and fresh water fishing and aquaculture industries dipped 7.2 percent, 24 percent and 21.9 percent, respectively.
In the industry sector, construction grew by 6.4 percent YoY but mining and quarrying, manufacturing textiles and wearing apparel, manufacture of refined petroleum products and other non-metallic mineral products declined against the corresponding quarter in 2014.
In the service sector, all sub-sectors except for IT programming and consultancy services and professional services, showed a growth.
Wholesale and retail trade grew by 5.9 percent, transportation by 4 percent, telecommunication by 19.4 percent, financial services by 13.7 percent and real estate by 15.5 percent YoY.
While this is Sri Lanka’s GDP based on the ‘production approach’, GDP compilation based on the ‘expenditure approach’ will be released in the near future.

Ministry split to cost statistics

With the splitting up of Cabinet portfolios, gathering and publishing national statistics is likely to become even more cumbersome and inaccurate.
The Census and Statistics Department published the economic growth statistics for the quarter ended June 30 only yesterday. Further, the Central Bank forwarded its annual report for 2014—which contains an overview of the whole economy including monetary, fiscal and foreign trade figures—only on April 29 to the Finance Ministry.
Partly, this is due to the lethargic and politicized nature of the state bureaucracy and auditing process—which President Maithripala Sirisena said covers up the corruption of its political masters.
The splitting up of ministries multiplies this negative effect.
“If you look at agriculture, it is divided among 13 ministries. This makes it hard to exchange and collect statistics. In some cases statistics are missing and the Central Bank can only make estimates,” Verite Research Economic Research Head Subhashini Abeysinghe said recently.
Renowned economist Dr. Indrajit Coomaraswamy too agreed that splitting up ministries would have far-reaching economic consequences.
While the current regime justified the splits—which ensure further duplication of costs and personnel—to form the national government in August, it had made no secret in making political appointments to top bureaucratic posts since the takeover in January.
Further, officials in the Statistics Department blew the whistle on the past regime when it meddled with the accounts.
With the multiplication of ministers—many of whom were also in the past regime—the situation for the next two years looks bleak.
The Information Communication Technology Agency (ICTA) is attempting to completely digitize the government processes and data collection as a solution, similar to developed countries.
However, this would depend on how the aging bureaucracy would receive and utilize the technology.
(CW)

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Sri Lanka’s rebased GDP grows at 6.7% in 2Q15

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