Curfew, import restrictions contract GDP by 1.3% in Q3
a year ago
Driven by a 41-day lockdown and increase in input prices due to import restrictions, the gross domestic product (GDP) rate of Sri Lanka for the third quarter of 2021 has contracted by 1.3%, according to the Department of Census and Statistics (DCS). The DCS added that infected patients with the Delta strain were reported to exceed local hospital capacity, with an increase in the number of deaths, which had a negative impact on the expanding economic activities in the “new normal”. It further noted that due to the spread of the pandemic throughout the country, the Government imposed an islandwide quarantine curfew from the midnight of 20 August 2021 to control the spread. The quarantine curfew was extended from time to time and lasted for 41 days until 1 October. The Government allowed agricultural activities, many manufacturing industries, construction, and selected services to continue even during the quarantine curfew period with the objectives of maintaining the essential commodity supply chain, protecting foreign exchange inflow, and ensuring household income. “It was observed that the majority of the people exercised self-restraint to escape the danger of this pandemic. During this period, there was a clear decline in the economic activities, especially in the wholesale and retail trade, manufacturing industry, construction industry, transportation, accommodation and food serving, and providing private services. At the same time, increased input prices of producers due to import restrictions imposed as a solution for declining foreign money reserves also contributed to the slowdown in economic activity. Under this situation, many economic activities reported negative growth rates in the third quarter of 2021 compared with the same quarter of previous year,” the statement added. After the first wave of the Covid-19 pandemic in 2020 was well controlled by the Government, businesses were carried out in the new normal as usual. At the same time, the lifestyles of the people were partially restored. Accordingly, the Sri Lankan economy grew by 1.3 % in the third quarter of 2020. The GDP growth in the third quarter of 2021 is calculated from the higher level of real GDP value recorded in the third quarter of 2020. The Department further stated that the GDP at constant prices (2010) has decreased to Rs. 2,497,489 million by the third quarter of 2021 from Rs. 2,536,490 million reported in the third quarter of 2020. In addition, the GDP at current prices rose to Rs. 4,132,955 million in the third quarter of 2021 from Rs. 4,087,148 million reported in the same period of 2020, recording an increase of 1.1%. The three main components of the economy – agriculture, industry, and services – contributed to the GDP at current prices by 8.7%, 29.9%, and 57.4%, respectively. In the third quarter of 2021, overall agricultural activities recorded a slight positive growth of 1.7%. This was positively affected by the fact that the Government had allowed agricultural activities to continue throughout the country even under the quarantine curfew. Industry and services-related activities recorded negative growth rates of 2.1% and 1.6%, respectively, during the relevant quarter, whereas in the same quarter of last year, these activities recorded positive growth rates.