The country’s economy in the second quarter had grown by a robust 8.2% as against 7.9% in the previous first three months though marginally lower from 8.5% achieved a year earlier.
As per latest GDP data released by the Department of Census and Statistics yesterday, economic growth of 8.2% had been bolstered by resilient performance by the services and industry sectors and the high GDP figure was despite severe challenges in agriculture sector.
Services sector which account for 60.2% of the GDP grew by 8.8% as against 8.6% in the corresponding quarter of 2010, whilst the industry sector with a 28.4% share of GDP, grew by 9.4% up from 9.2% a year earlier. Agriculture sector managed to grow by 1.9% in the second quarter of 2011, lower in comparison to 6.3% a year earlier. However agriculture bounced back in the second quarter as against a 5.1% negative
Whilst services and industry managed to grow in second quarter, it was nevertheless at a slower pace as against the first quarter when respective growth rates were 9.5% and 11.1%.
On second quarter analysis it was the first time in three years that services sector accounted for over 60% share of the GDP after having dipped to 59.9% in 2010 second quarter and 59.8% in 2009.
Given the impact of adverse weather conditions in the early part of 2011 and global recession, analysts viewed the second quarter performance of the economy as very encouraging. It is also more in line with the Government forecast as well as those by multilateral donor agencies such as the World Bank and the Asian Development Bank.
Whilst the IMF estimates Sri Lankan economy to grow by only 7.5% in 2011, lower in comparison to a record 8% of 2010, the Daily FT yesterday reported that the ADB retained its 8% forecast for 2011 in the latest Asian Development Outlook. This was despite revising downwards the South Asian forecast.
The latest GDP data for second quarter is likely to raise the confidence level of the private sector and investing community as previously a lower than 8% growth was feared due to the twin impact of adverse weather and highly volatile global market conditions.
However there is no denying the fact that the economy is certainly losing steam in comparison to the first quarter of 2011 and the second quarter. This has prompted independent analysts to caution that the Government needs to redouble its efforts in terms of policy and macro environment support if Sri Lanka were to achieve the originally forecast growth of 8% + this year.