By: Staff Writer
Colombo (LNW): Sri Lanka’s economy) shrank 4.1 percent in the second quarter of 2023, official data showed this week, as the country remained in the grip of its worst financial crisis in decades.
The downturn was driven by, the rising cost of components, as well as restrictions on imports and lower earnings from apparel exports, Census and Statistics Department said in a statement.
The contraction in the economy during the second quarter had reduced to 3.1% year-on-year (YoY) reflecting rebound from 11.5% shrinkage in the first three months of 2023.
The Department of Census and Statistics (DCS) Sri Lanka, recently released the estimated Gross Domestic Product (GDP) at current price and at constant (2015) price in the production approach and the other macroeconomic indicators for the second quarter (1 April to 30 June).
It said the YoY GDP growth rate for the second quarter of year 2023 has been reported as 3.1% of negative growth rate.
In the second quarter of 2023, the overall Industry and services activities declined by 11.5% and 0.8% respectively while overall agriculture activities grew by 3.6%. The three major economic activities of the economy.
‘Agriculture’, ‘Industry’ and ‘Services’ have contributed their share to the GDP at current prices by 10.4%, 27.0% and 56.8% respectively, while ‘Taxes less subsidies on products’ component has contributed 5.8% of share to the GDP in the second quarter of year 2023.
The GDP for Sri Lanka for the second quarter of year 2023 at constant price (2015) has declined up to Rs. 2,597,441 million from Rs. 2,680,074 million which was recorded in the second quarter of year 2022.
In addition, the Gross Domestic Product for Sri Lanka for the second quarter of 2023 at current price has increased up to Rs. 6,145,451 million from Rs. 5,442,362 million which recorded in the same quarter in year 2022 registering 12.9% of positive change in the current price GDP.
Sri Lanka’s economy is expected to shrink by 2% in 2023, its central bank said in an annual report on Thursday, as the country struggled to emerge from its worst financial crisis in decades.
The central bank projected Sri Lanka’s economy would grow by 3.3% in 2024, according to the report.
The economy shrank by 7.8% in 2022, in a year dominated by deep political instability, soaring inflation and steep currency depreciation as Sri Lanka struggled with a financial crisis triggered by record low foreign exchange reserves.
The central bank’s growth estimate for 2023 is more optimistic than the 3.1% contraction projected by the International Monetary Fund (IMF), which finalised a nearly $3-billion bailout to the crisis-hit country last month. The World Bank estimates Sri Lanka’s economy will contract by 4.3% in 2023.
“Sri Lanka’s economy has been gradually stabilising since mid-2022. The long fuel lines, severe shortages, and high inflation have gradually reversed,” said Udeeshan Jonas chief strategist at CAL Group.