Economy ecstatic!
Yet again proving its resilience amidst global shocks and the recession in the West, the country’s economy in the third quarter has grown by 8.4%, a rate viewed by analysts as faster than expected.
The high 8.4% growth in Gross Domestic Product (GDP) was above the 8% achieved in the corresponding period of last year. It also figures well above the 8.2% achieved in the second quarter of this year and is also the highest quarterly growth since the 2010 last quarter’s 8.6%.
Industry and services have empowered the third quarter growth whilst agriculture continues to consolidate following impact of weather.
The industry sector grew by 10.8% above 8.8% a year earlier whilst services growth was 7.8%, marginally down from 8% in 2010 third quarter. Agriculture grew by 6.2%, up from 6% a year earlier. In the second quarter of this year, agriculture grew by only 1.9%, industry by 9.4% and services by 8.8% over the corresponding period of last year.
The services sector continues to enjoy the biggest share of the economy at 59.2% followed by industry at 29.1% and agriculture 11.7%.
Reflecting buoyancy in the post-war construction boom, this sub sector had delivered a record 17.3% growth on top of 18.8% enjoyed in the second quarter. In 2010 third quarter construction grew by 11.3%. Share of construction sector in GDP topped the 7% mark to 7.3% up from 6.7% a year earlier.
The manufacturing sector which accounts for 17% share of GDP also showed a robust 7.7% growth, higher than the 6.5% expansion in the last year’s third quarter, led by a solid 10.2% growth in textile sector.
The tourism sector jumped 27.2% year-on-year, sustaining its growth of more than 20% growth since the end of the war in May 2009. However, in the third quarter of last year, the hotel and restaurants sub sector grew by 32% and 33% in second quarter of 2011. The wholesale and retail trade, which accounts for 24.5% of GDP, grew by 9.5% up from 7.8% a year earlier. The transport and communication sector commanding a 14.2% share expanded by 10% as against 12% growth in the third quarter of last year.
In agriculture, the tea sub sector had declined by 7% largely on account of poor crop, in comparison to the 2.8% growth achieved in 2010 third quarter whilst rubber grew by only 2.2% down from 16% a year earlier, whilst coconut produced a welcome rebound with 5% growth as opposed to the 22% contraction in the third quarter of last year.
The fishing sector accounting for 1.3% share of GDP had grown by 17.3%, up from 14.4% a year earlier.
Analysts said the third quarter overall GDP performance reaffirmed the resilience of the economy despite the impact from the global downturn especially in the West and other crises.
“The performance is encouraging and augurs well for the future,” a business leader told the Daily FT. It proves that macroeconomic fundamentals remain sound if not very positive and this should boost overall business and investor confidence, he added.
“We are on track to achieve this year’s growth target,” Central Bank Governor Ajith Nivard Cabraal had told Reuters, adding that he is also “fairly optimistic” about the fourth quarter.
A Reuters poll of 10 analysts had predicted eight per cent annual growth in the third quarter.
Samantha Amarasinghe, an Economist at Standard Chartered Bank, had told Reuters there could be a “slight slowdown” in the current quarter but the full year is “looking good”.
The Central Bank has maintained monetary policy rates at more than six-year lows since January and private sector credit growth has been at a 16-year high.
However, Reuters reported unnamed analysts and economists as saying the 3% currency devaluation on 21 November, a delay in the eighth tranche of a $ 2.6 billion International Monetary Fund loan and contradictory investment policies could dampen post-war investor sentiment and slow the economy’s expansion.
