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Economy grows by 12.3% in Q2 

19 Sep 2021

Issuing a communiqué on releasing National Accounts Estimates, the Department of Census and Statistics (DCS) stated that the year-on-year (YoY) Gross Domestic Product (GDP) growth rate for the second quarter of 2021 has been estimated as 12.3% of positive growth rate. This positive growth comes against the backdrop of a 16.4% contraction in the economy reported in the second quarter of last year.  In addition, the GDP for Sri Lanka for the second quarter of 2021 at the current price has increased up to Rs. 3,626,482 million from Rs. 3,007,345 million which was recorded in the second quarter of 2020 registering 20.6% of change in the current price GDP.  The three major economic activities of the economy; agriculture, industry and services have contributed their share to the GDP at current prices by 9.2%, 27.0%, and 57.9% respectively, while the ‘Taxes fewer subsidies on products’ component have contributed 5.8%t of share to the GDP in the second quarter of 2021.  During the second quarter of 2021 all three major economic activities recorded significant positive growth rates of 8.1%, 22.1% and 7.5% respectively by agriculture, industrial and services activities. These recorded high growth rates come back as a result of the contraction reported in these activities in the second quarter last year.  When considering the GDP estimates of the second quarter last year, the real GDP level reduced up to Rs. 1,932,319 million, from Rs. 2,312,528 million which was recorded in the second quarter of 2019. As a result, the GDP growth rate hit 16.4 % of negative growth rate, which was the largest drop in the series of GDP growth rates ever recorded in Sri Lankan history. Accordingly, in the second quarter of 2021, the YoY GDP growth rate has been calculated based on that reduced level of real GDP.  Further, the GDP for Sri Lanka for the second quarter of 2021 at the constant price has increased up to Rs. 2,170,052 million from Rs. 1,932,319 million which was recorded in the second quarter of 2020. However, the following figure clearly shows that the economy still has not reached at least the GDP level, reported in the second quarter of 2019. That indicates the level of GDP yet to be achieved to recover the economy.  DCS stated that the performance of the Sri Lankan economy during the second quarter of the year 2021, was at satisfactory level, until the third wave came in late April, when compared to the same quarter in the previous year.  “Unlike last year, people were able to celebrate the Sinhala and Tamil New year festival this year, even under some Covid-19 health warnings and precautions. Many people in the society enjoyed this great relief after being under a long period of imposed restrictions, such as doing business activities, travel restrictions, and health precautions. As a result of this, especially in the month of April, this peaceful environment affected most of the business activities, except very few like international tourist arrivals-related businesses and entertainment-related businesses and cultural activities.”  Soon after the end of the Sinhala and Tamil New year festival, and the end of the month of April, the third wave of the Covid-19 pandemic raised up while reporting a high growing number of Covid-19-positive patients from all the districts in the country. As a result of the fast spread of this pandemic and the new Delta variant of the Covid-19 virus, the Government decided to impose travel restrictions from 21 May, covering the whole country in order to prevent the spreading of this pandemic. However, when compared to the nature of the lockdown period in the year 2020, it was not quite strict this year.  The Government permitted all agriculture-related activities, manufacturing activities, construction work, and many services-related businesses to continue their work even under this lockdown period. This created some sort of favourable environment to continue businesses in the second quarter of this year when compared to the situation and the nature of the lockdown period in the second quarter of 2020. As a result, most of the economic and business activities have reported expansions in their industries when compared to the second quarter in the year 2020.


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