Industrial activities soar to second highest in 4Q16

The industrial activities in Sri Lanka sped up to the second highest during the fourth quarter of the 2016 (4Q16) calendar year through increased production of wearing apparels and non-metallic minerals, pushing the Index of Industrial Production (IIP) up 4.3 percent year-on-year (YoY).

The Census and Statistics Department started the IIP in 2016 to measure the short-term changes of the volumes of industrial goods production. The base year of 2015 was given a 100 index value, with the values below the base denoting the slowdowns in production and vice versa.
The index for 4Q16 was the second highest at 104.3, compared to a high of 104.8 recorded in 1Q16.
The country had then entered into a lengthy period of supply disruption due to a continuous succession of weather anomalies, with the index falling to 101.1 percent in 2Q16 prior to recovering somewhat in 3Q16 with an IIP value of 103.0.
In contrast, service-dominated Sri Lanka’s gross domestic product increased 4.0 percent in 1Q16, 2.1 percent in 2Q16 and 4.1 percent in 3Q16.
Within 4Q16, November represented the period of highest industrial activity, with an index value of 104.5, increasing from 104.3 recorded in October. Production fell in December, denoted by a 103.6 IIP value.
Food manufacturing, contributing 35.2 percent towards production in the index, remained unchanged at 101.5 between 4Q16 and 3Q16, possibly due to the continued drought disrupting the supply, registering just below the 101.6 index high in January.
Manufacture of wearing apparels, the second in significance with a weight of 19.8 percent, recorded its highest annual value of 107.1 during 4Q16, after the 3Q16 values fell to the lowest level of 103.8, due to the low export demand from the traditional markets - the US and EU, due to the changes in their political economies.
In the latest external sector figures, the Central Bank had noted that there was a change in the pattern of garment exports in October, with non-traditional countries importing more Sri Lankan-made apparel.
Manufacture of non-metallic mineral products, which make up 7.8 percent of industrial activity, surged to 114.1 in the IIP from 105.2 in 3Q16, the highest annual figure, continually increasing each quarter from 94.7 recorded in 1Q16.
Coke and refined petroleum products, representing 7.4 percent of industrial activity, fell to an annual low of 90.8 on the IIP in 4Q16, from 99.7 in 3Q16, as lower bunker prices and high costs of vehicles due to taxation and depreciation of the rupee slowed vehicle imports.
Manufacture of rubber and plastic products, with an index weight of 5.7 percent, remained flat from 3Q16 to 4Q16 at 104.2.
Owing to the price controls imposed on the pharmaceutical sector in December, the manufacture of basic pharmaceutical products and pharmaceutical preparation values on the index fell to the second highest annual value of 115.4 in 4Q16, after reaching a peak of 124.5 in 3Q16.
Tobacco production remained relatively flat in 4Q16 compared to 2015 at 100, but fell from 114.5 in 3Q16 as excessive taxation took a hit on the industry, driving it to an annual low.
Beverage production increased to an annual high of 110.4 in 4Q16, up from 104.4 in 3Q16, as drier weather conditions increased demand.