ECONOMYNEXT – Sri Lanka’s gross domestic product expanded 1.6 percent in the second quarter, of 2019 from a year earlier, in the wake of a currency collapse in 2018 and Easter Sunday attacks, data from the state statistics office showed.
In the first half of 2019 GDP was estimated to have grown 2.6 percent.
The agriculture sector grew 1 percent in real terms, amid falling prices.
Industry grew 1.4 percent and services 1.6 percent after adjusting for inflation.
Sri Lanka has seen increasing monetary instability in recent years, with gaps between currency collapses narrowing with the operation of ‘flexible inflation targeting’, with a highly unstable soft-peg labeled a ‘flexible exchange rate’, giving wide discretion for the central bank.
The rupee fell from 153 to 182 to the US dollar in 2018 and private credit has weakened.
The current administration has also not done any growth generating reforms, and continued and earlier state oriented policy.
An attempt at free trade was also stymied with fresh trade controls, due to the unstable ‘flexible exchange rate’ and ended with Nixon-shock style policy responses, critics have said.
The services sector recorded the lowest growth since 2010, with hotels and transport shrinking 0.6 percent, the statistics office said. Hotels were hit by Easter Sunday bombs.
Information technology and communications grew 8.2 percent. Finance and insurance grew 8 percent, the statistics office said.
In agriculture, coconut output grew 28.3 percent, rubber 4.7 percent. A drop in maize contracted cereal output 3.3 percent.
In industry apparel and leather grew 6.2 percent. The statistics office said construction was up 2.4 percent. But mining and quarrying was down 0.5 percent, wood products was down 24.4 percent, metal products were down 4.8 percent.
Sewerage and waste was up 10.9 percent, water collection and supply was up 7.3 percent. (Colombo/Sept18/2019)