Sri Lanka’s 2Q 2014 economic performance
The estimated Gross Domestic Product at constant (2002) prices and its related economic indicators for the second quarter of 2014 has been released by the Department of Census and Statistics (DCS) Sri Lanka of the Ministry of Finance and Planning. Here is the full text of the statement:The total economic output in Sri Lanka, measured by the Gross Domestic Product for the second quarter 2014 (April, May, June) was Rs. 840,653 million, recording a positive growth rate of 7.8% compared to the second quarter of 2013 which was estimated as Rs. 779,974 million.
The three main pillars of the economy – Agriculture, Industries and Services sectors – shared GDP at a constant price (2002) by 10.6%, 31.5% and 58% respectively in the second quarter of 2014.
The main sub sectors Agriculture, Livestock and Forestry and Fishery achieved rates of growth of 5.9% and 10.5% respectively in 2014 second quarter, compared to the second quarter of 2013. Tea and Coconut production showed a striking increase of 7.1% and 9.4% respectively over the corresponding time period, and sub sector Vegetables, which shares the 3.3% of GDP, has increased by 8.9% during this period. Inland fishery has shown an outstanding increase of 73% in this quarter compared to the second quarter of 2013.
Industry sector all together shows a 12.2% increase within this period. Under the industry sector, Gem Mining, Textile, Wearing Apparel and Leather products, Chemical, petroleum, coke, rubber and plastics and Construction sub sectors has achieved 15.8%, 15.9%, 16.9% and 19.7% growth rates respectively compared to the 2013 second quarter.
In the service sector Hotels and Restaurants has reported highest rate of increase by 20.5% and this is followed by Export Trade 11.1% and Domestic Trade 10.1%.
Meanwhile the growth rates of sub sectors of Rubber, Paddy, Minor Export Crops and Import trade has decreased by 3.7%, 5.7%, 16.5%, and 3.3% respectively during the period of review.
GDP implicit price deflator which measures the price change in the economy with respect to the base year (2002=100), increased to 269.2 in the second quarter of 2014 from 255.5 in the second quarter of 2013 recording an inflation rate of 5.4% in the second quarter of 2014. In the second quarter of 2014, Colombo Consumer Price index (CCPI) (2006/2007=100) is reported as 179.8. Compared to that of 173.5 in the second quarter in year 2013, it recorded 3.6% inflation rate in 2014 second quarter.
Agriculture sector
The growth rate of Agriculture sub sector including Agriculture, Livestock and Forestry increased by 5.9% in the second quarter of 2014 compared to the 0.5 decrease reported in second quarter of 2013.
The value added of tea sub sector has increased significantly by 7.1% in the second quarter of 2014 compared to the second quarter of 2013. Tea production of this quarter has risen due to favourable weather conditions prevailed in tea grown areas. Tea advertising and promoting programs undertaken by the tea promotion division of Sri Lanka Tea Board facilitated to improve the demand of Sri Lanka Tea at the global markets, finally rewarded with higher prices and demand in this quarter. The tea prices at Colombo Tea Auction also have increased by 12.5%.
The value addition for rubber has dropped by 3.7% in the second quarter of 2014 compared to the second quarter of 2013. It also recorded a drop of 25.8% in 2013 second quarter. The average price of Latex has been dropped by 26.3% in this quarter. The low demand for Sri Lankan natural rubber at the global markets badly affected retaining of labourers in rubber tapping activities.
The value added of coconut sub sector has recovered to a substantial level with increase of this sector by 9.4% in the second quarter of 2014 compared to the drop of 20.4% reported in the second quarter in 2013. According to the statistics of Coconut Development Authority, the favourable rainfalls prevailed around 1589mm, in the districts belonging to the coconut triangle in the last year is the main reason for this improvement in production. Hence the production of coconut increased up to 80.3 million nuts i.e. 12.6% increase in nuts production compared to the second quarter in 2013. The farm gate prices remained virtually same in the second quarter of both years.
The value addition for Minor Exports Crops (MEC) dropped by 16.5% in this quarter, which showed an increase of 2.1% in the same quarter 2013. This drop was mainly due to low production of main export crops i.e. cinnamon, pepper, cloves, mace and nutmeg.
The value addition of paddy production decreased by 5.7% in the second quarter of 2014. The severe drought continued in the dry zone during the early months of 2014 accountable for the decline in paddy production in this quarter. Compared to the 2012/2013 Maha season, 2013/2014 Maha season showed a decrease in the sown and harvested extents by 18.5% and 23.5% respectively.
Livestock sub sector showed only a slight increase over the period with 1.9% growth. Poultry production has increased by 6% while Hoof and Mouth Disease caused a decrease in milk production by 18.9% in the second quarter of 2014 compared to the second quarter of 2013.
Other food crops sub sector, which include highland crops, vegetables and fruits, recorded a substantial increase of 10.4% in the second quarter, 2014. The value addition of highland crops, vegetables and fruits has increased by 18.2%, 8.9% and 3.2% respectively in this quarter compared to the second quarter in last year. Favourable weather conditions prevailed throughout Maha season 2013/2014 in respective areas improved the growth in this sector. Compared to 2013 second quarter, percentage growth in the plantation development sector showed a slight increase by 2.9% in the second quarter of this year.
The land extent of replanted and new planted for tea, rubber and coconut showed only 3% increases within this period. The land extent of coconut and rubber re‐plantation increased from 1,403Hc to 4,147Hc and from 439Hc to 527Hc respectively in the second quarter of this year compared to 2013. Land extent of new plantation of tea, rubber and coconut reduced by 52%, 27% and 65% respectively compared to the second quarter of 2013. In the second quarter of 2014, value added of fishing increased by 10.5%.
Inland fishery production increased extensively by 73.0% compared to second quarter of 2013. According to the Ministry of Fisheries, the substantial distribution of fingerlings to the tanks and giving subsidies to the farmers under the ‘Divi Neguma’ program boosted the inland fishing industry in this quarter. Marine fish production has increased by 4.0% against the second quarter of 2013.
Industry sector
The Industry sector, which contributes 31.5% to Gross Domestic Product at national level, showed a growth of 12.2% in the second quarter of 2014 compared to the growth of 10.1% in the second quarter of 2013. In the second quarter 2014, mining and quarrying sub sector showed a growth rate of 9.3% which is comparatively lower than the growth rate of 12.6 reported in second quarter of 2013.
Within this sub sector, Gem mining has overwhelmed the other mining sub sector in this quarter, showing an increase rate of growth of 15.8% compare to the 7.6% reported in second quarter 2013. The gem export values also increased by 51.4% in the second quarter of 2014.
The Processing industry sub sector under the Manufacturing sector showed a substantial growth of 8.0% in this quarter compared to 2.4% drop reported in second quarter of last year. The increase in tea and coconut related products in this quarter are the major contributing factors for the higher growth rate experienced in the Processing industry.
The Factory industry is the main pillar in manufacturing sub sector and it has increased by 10.9% in the second quarter of 2014. The major contributors to this sub sector, Food Beverages and Tobacco, Textile Wearing Apparels and Leather Products showed growth rates of 9.0% and 15.9% respectively compared to the second quarter of 2013. According to the trade indices of the Central Bank of Sri Lanka for these two sectors, export quantity indexes of second quarter of 2014 has increased by 20.5 and 15.6 respectively. Chemical, Petroleum, Coke, Rubber and Plastic sub sector also recorded an increase of 16.9% in the second quarter 2014.
The growth of Electricity, Gas and Water sub sector showed significantly low growth rate of 3.2% in this quarter compared to the growth rate of 16.2% recorded in the second quarter of 2013. The continuous dry weather prevailed in catchment areas of hydro power stations is the main reason for the reduction of hydro power production. Thus thermal power generation has been increased, to provide an uninterrupted power supply.
In this quarter hydropower generation has decreased by 56% which was harmonised by increasing thermal power generation by 82%. Hence the existed ratio of 57:45 hydro and thermal power generation in the second quarter of 2013 has changed to 24:76 in the second quarter of 2014. The cost of inputs for thermal power generation is comparatively higher than inputs of hydro power generation, and as a result, the value added of electricity sub sector shows a marginal increase in this quarter in 2014.
Services sector
The Services sector which corresponds to a higher share of 58% to Gross Domestic Product has recorded a 5.7% increase in the second quarter 2014. In 2013, in the respective quarter, it showed a 6.6% increase. The Wholesale and Retail Trade sector which gives a highest contribution to the service sector showed 5.9% growth compared to the same quarter in 2013. In addition, Transport and Communication and Banking, Insurance and Real Estate sectors and Private Services grew by 7.6%, 6.1% and 6.4% respectively.
The Export Trade sector recorded a relatively a higher growth of 11.1% in the second quarter of 2014, when compared to the slower growth of 1.2% recorded in the second quarter of 2013. According to the Balance of Payment statistics of the Central Bank of Sri Lanka, export earnings increased to Rs. 343,058 million in the second quarter of 2014, from Rs. 291,274 million in the second quarter 2013, indicating a growth of 17.8%. Compared to the second quarter of 2013, agricultural and industrial exports grew by 26.5% and 15% respectively. According to the Trade Indices of Central Bank of Sri Lanka, export volume index and unit value index have increased by 11.6% and 5.6% respectively in second quarter 2014.
The Import Trade sector dropped by 3.3% in the second quarter of 2014 compared to the 7.4% growth recorded in second quarter 2013. According to the Balance of Payment Statistics of the Central Bank of Sri Lanka, the total import expenditure in the second quarter of this year has decreased to Rs. 552,744 million from Rs. 580,800 million in the same quarter of the last year, indicating a slight drop of 5% in this sector. According to the Trade Indices, import volume index has decreased by 7.9% and unit value index has grown by 3.4 in the second quarter 2014.
The domestic trade sector which recorded 6.9% growth in the second quarter of 2013 further grew by 10.1% in this quarter. In the second quarter of 2014, value added of Hotels and Restaurant sector recorded a higher growth of 20.5% and in the same quarter of previous year also this sector grew by 21.1%. The tourist arrivals increased to 305,852 in the second quarter of 2014, from 245,854 in 2013 respective quarter and this amount to a growth of 24.4%.
Transport and Communication sector indicated 7.6% growth compare to 9.5% growth in the second quarter in 2013. The Passenger and Goods Transportation, Cargo Handling and Posts and Telecommunication sub sectors grew by 7.2%, 9.0% and 9.9% respectively.
The total number of new registration of vehicles has increased by 3.3% in this quarter as against 14.2% drop in the second quarter of 2013. Registration of buses and motor vehicles were increased by 14.3% and 6.4% respectively in this period.
The amount of total cargo through the Ports Authority has increased by 8.2% in this period. Cargo carriages of SriLankan Airlines increased by 0.5% and passenger kilometres flown decreased by 3.6% in the second quarter of 2014.
The mobile phone sector has been showing a remarkable increment during the past few years. The mobile phone subscribers have increased to 21.4 million by the end of second quarter of 2014. Total telephone subscribers including both fixed and mobile services increased from 22.1 million to 24.1milion during the period of second quarter in 2013 and 2014, indicating 8.7% growth.
The Banking, Insurance and Real Estate sector recorded 6.1% growth in the second quarter of 2014 compared to 6.3% growth reported in the same quarter in 2013. Average Weighted Prime Lending Rate (AWPLR) and Average Weighted Deposit Rates (AWDR) recorded low rates of 7.9% and 7.4% respectively in the second quarter of 2014 compared to the recorded rates of 12.1% and 10.6% respectively in the second quarter of 2013.
