Economy grows 3.7% in 1Q; but unlikely to maintain momentum for remainder of the year

• Agriculture sector grows strong 5.5% amid favourable weather 
• Rice and coconut cultivation see sharp increase
• Construction activities grow 6.9%; financial services 9.8%

Strong recovery in agriculture amid favourable weather gave a boost to the reeling economy in the first quarter of 2019 (1Q19), as the economic growth for the three months was recorded at 3.7 percent from a year earlier—the highest rate nearly in a year. 

 According to the data released by the Department of Census and Statistics, Sri Lankan economy grew 1.8 percent in the previous quarter (4Q18).

 However, despite the strong recovery in growth in 1Q19, the economy is expected slump this year following the Easter terrorist attacks that delivered a lethal blow to the country’s booming tourism sector, which accounts for over 5 percent of the GDP.

 During 1Q19 agricultural activities expanded by 5.5 percent compared to 5.1 percent a year earlier while the industrial activities grew 3 percent compared to 1.7 percent. The services sector activities expanded by 4.1 percent. 
 The four major components of the economy—agriculture, industry, services and taxes less subsidies on products have contributed their shares to the GDP at current price by 6.9 percent, 31.6 percent, 53.9 percent and 7.7 percent respectively in this quarter.

Among the sub activities of agriculture, ‘growing of rice’ has expanded by 13.1 percent in this quarter compared to the first quarter of 2018.

 Growing of oleaginous fruits including coconut achieved an outstanding growth rate of 35.6 percent in this quarter compared to the recorded negative growth rate of 15.7 in the first quarter 2018. 

 Meanwhile, animal production, growing of fruits, plant propagation activities and support services to agriculture and growing of vegetables recorded substantial growth rates of 9.4 percent, 8.1 percent, 6.9 percent and 4.7 percent respectively in 1Q19 compared to the first quarter of 2018. 

The sub activities of growing of cereals, marine fishing and growing of tea showed contractions of 12.9 percent, 2.0 percent and 1.7 percent. In industrial activities, the sub activities of construction and mining and quarrying grew by 6.9 percent and 5.8 percent respectively. 

Within manufacturing activities, manufacturing of coke and refined petroleum products reported a considerable expansion of 94.8 percent, while manufacture of furniture, manufacture of food beverages and tobacco products, manufacture of textile, wearing apparels and leather products and manufacture of rubber and plastic products reported expansions of 5.7 percent, 2.3 percent, 1.9 percent and 1.6 percent respectively. Meanwhile, the manufacture of wood and wood products, manufacture of paper products, printing and reproduction of media products and manufacture of basic metals and fabricated metals reported considerable contractions of 23 percent, 11.2 percent and 10.5 percent respectively compared to the first quarter of 2018.

The two activities, electricity, gas, steam and air conditioning supply and water collection, treatment and supply expanded by 0.6.percent and 6.4 percent respectively in 1Q19 compared to a year ago.

Among the service activities, telecommunication and IT programming consultations and related activities achieved considerably high growth rates of 15.1 percent and 11.7 percent respectively in 1Q19.

Meanwhile, financial service activities, programming and broadcasting activities, insurance reinsurance and pension funding activities, other personal services, accommodation and food beverages services, wholesale and trade and transportation of goods and passengers including warehousing expanded by 9.8 percent, 8.1 percent, 8.0 percent, 4.6 percent, 4.5 percent 4.4 percent and 1.8 percent, respectively, in 1Q19 compared to the first quarter of 2018.