Amid a looming current fiscal crisis linked to cost of living crunch in the country’s vulnerable people wonder how much longer they can cope, as the Government battles the nation’s worst economic down turn since independence in 1948.
The downward spiral in the third quarter worsened with a contraction of 11.8% on the back of 8.4% negative growth in the preceding three months.
The overall Agriculture activities shrank by 8.4%, Industry by 21.2% and Services by 2.6%. In the 3Q of last year, the economy grew by 4.4% from a lower base of COVID-hit 2020.
The Department of Census and Statistics (DCS) said yesterday that the three major economic activities of the economy; ‘Agriculture’, ‘Industry’ and ‘Services’ contributed their share to the GDP at current prices by 8.7%, 34.5% and 54.1% respectively, while ‘Taxes less subsidies on products’ component has contributed 2.7% of share to the GDP in the third quarter of 2022.
Though the influence of the COVID-19 pandemic was comparatively low in the third quarter, DCS said several other factors highly affected the functioning of the economy of the country.
Factors such as high inflation, the energy crisis that prevailed during the early stages of this quarter, high-interest rates, and shortage of inputs required for manufacturing activities, high prices of inputs, shortage of cement, high prices of construction materials were among the repercussions exerted hardships for the people.
Other reasons were the issues with fertilizer usage and agrochemical sectors, increase of the transport cost, difficulties in distributing goods, decrease in the demand of essential and non-essential goods and services due to the reduction of the real income of the people
Due to the above effects, the major economic activities such as construction, mining and quarrying, manufacturing activities, financial services, insurance, reinsurance and pension funding, animal production, growing of rice, growing of cereals, growing of vegetables, and marine fishing and marine aquaculture have recorded huge drawbacks of production during this quarter when compared to the same period of the previous year.
The GDP at the current price in 3Q has increased up to Rs. 6.4 trillion from Rs. 4.4 trillion a year ago registering a 45.2% of positive change. This expansion of the GDP at current prices clearly indicates the influence of the high inflation that prevailed throughout this quarter.
