Economy contracts by 3.1% YoY in 2Q23

• Agriculture activities expanded by 3.6%
• Industrial and Services activities dip by 11.5% and 0.8%
• Consumption pattern of general public limited for consumer goods due to pressure derived through reduction in real income
• High input costs have led to the deterioration of international competitiveness in terms of exports
• Manufacturing industrial activities, construction activities, and mining and quarrying activities have reported considerable declines
• IT programming consultancy and related activities and professional services records further contractions

Sri Lanka’s Gross Domestic Product (GDP) growth rate for the second quarter of 2023 (2Q23) contracted by 3.1 percent, the Department of Census and Statistics (DCS) said.
The GDP for Sri Lanka for 2Q23 at constant price (2015) has declined up to Rs. 2,597,441 million from Rs. 2,680,074 million recorded in the corresponding period in 2022. 

At current price, the GDP for 2Q23 increased up to Rs. 6,145,451 million from Rs. 5,442,362 million in the corresponding quarter in year 2022. This registers a 12.9 percent of positive change in the current price GDP. 
According to the DCS, 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 percent, 27.0 percent and 56.8 percent.
Meanwhile ‘Taxes less subsidies on products’ component has contributed 5.8 percent of share to the GDP in the second quarter of year 2023. 

During this quarter, Agriculture activities have expanded by 3.6 percent while Industrial and Services activities have contracted by 11.5 percent and 0.8 percent respectively.
In 2Q23, the pressure on short term and long-term investments caused by high interest rates in the economy remained in force. 
“Along with it was observed that the consumption pattern of general public was limited to consume mainly the consumer goods due to the pressure derived through the reduction in real income of them (general public),” the CDS said.

As a whole, expectations of domestic producer’s about the economy were at a lower level and continued to grow slowly and this was specially affected by the uncertain situation related to exchange rates.
The DCS noted that the high input costs have led to the deterioration of international competitiveness in terms of exports and as a result a decrease in export volumes could be observed. 

As a result, in the second quarter of 2023, manufacturing industrial activities, construction activities and mining and quarrying activities have reported considerable declines. As well, financial services activities, IT programming consultancy and related activities and professional services have recorded contractions further.