Sri Lanka’s economy records its worst contraction in the second quarter
2 min read
Sri Lanka’s economy recorded its worst contraction in the second quarter before returning to the positive growth path in the third quarter for the first time in the year, according to the Census and Statistics Department (DCS).
The country’s Gross Domestic Product (GDP) had contracted 16.3 percent in the second quarter of the year due to COVID-19 related lockdowns and travel restrictions.
However, the economy recovered to recording a 1.5 percent positive growth in the third quarter.
During the nine months of the year, Sri Lanka’s GDP contracted 5.3 percent.
In the second quarter, almost all sectors of the economy were severely affected due to the COVID-19 pandemic.
However, the country experienced the normalization of business activities and return to new-normality in day to day lifestyle of the people, after the first wave of the covid-19 pandemic through the thrid quarter of the year.
The GDP for the second quarter of 2020 at constant price has declined up to Rs. 1,936,273 million from Rs. 2,312,078 million which recorded in the second quarter of 2019.
In addition, the Gross Domestic Product for Sri Lanka for the second quarter of 2020 at the current price has decreased up to Rs. 3,012,013 million from Rs. 3,589,246 million which recorded in the second quarter of 2019 registering 16.1percent of negative change in the current price GDP value.
The four major components of the economy; ‘Agriculture’, ‘Industry’, ‘Services’ and ‘Taxes less subsidies on products’ have contributed their share to the GDP at current prices by 9.7 percent, 24.8 percent, 61.2 percent, and 4.3 percent respectively in the second quarter of 2020.
The GDP estimates of the second quarter have reported contraction in all three major economic activities of Agriculture, Industrial, and services by 5.9 percent, 23.1 percent and 12.9 percent respectively.
Furthermore, the ‘Taxes less subsidies on products’ has recorded 30.1 percent of decrease in the second quarter of 2020 with compared to the second quarter in the year 2019. This was due to the major fall in tax revenues resulting from amendments made in the Tax rates and the thresholds. This has affected to slowdown the overall GDP growth rate of the country.
The GDP growth rate for the third quarter of 2020 has been estimated as 1.5 percent of positive growth rate when compared to the 2.4 percent of positive growth recorded in the third quarter of 2019.
The GDP for the third quarter at constant price has increased up to Rs. 2,545,863 million from Rs. 2,509,418 million which recorded in the third quarter of 2019.
In addition, the GDP at current price has edged up to Rs. 4,085,213 million from Rs. 3,833,960 million which recorded in the third quarter of 2019 registering a 6.5 percent of change in the current price GDP.
The four major components of the economy; ‘Agriculture’, ‘Industry’, ‘Services’ and ‘Taxes less subsidies on products’ have contributed their share to the GDP at current prices by 8.2 percent, 27.7 percent, 56.8 percent and 7.4 percent respectively in the third quarter.
For the first time in the year, all three major economic activities of Agriculture, Industry & Services, have reported positive growth rates of 4.3 percent, 0.6 percent, and 5.3 percent respectively in the third quarter.
