Minister Rambukwella on past GDP growth: Correct but also misleading

16 January 2020 12:01 am Views - 1137

 

 

Minister Keheliya Rambukwella’s figures present a fourfold increase in GDP during Mahinda Rajapaksa’s presidency. The minister is correct in the figures he cites. However, this fact check will go on to explain why stating GDP in USD instead of LKR could be misleading.

FactCheck evaluated the claim using data from the Special Statistical Appendix of the Central Bank of Sri Lanka (CBSL) Annual Report 2018 and National Accounts Estimates of the Department of Census and Statistics.

The nominal GDP (not adjusted for inflation) calculated in USD increased from USD 20.6 billion in 2004 to USD 79.4 billion in 2014. This aligns with the minister's claim (rounded off).
Therefore, we classify the minister’s statement as TRUE. 

However, this statistic can be misleading. The reportage has the minister switching to USD from LKR for only this statistic. Stating GDP in USD, instead of the local currency, usually implies an actual increase in production instead of an increase in production plus price inflation. If the minister's intent was to communicate the extent of economic expansion, a more appropriate measure would be inflation adjusted GDP in LKR, not nominal GDP in USD. During this period, inflation adjusted GDP in LKR increased from 1.8 trillion to 3.5 trillion (in 2002 constant prices). That is an increase by a multiple of two, not four.

 

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