Industrial production plunges in July amid massive social unrest

Sri Lanka’s industrial production slumped in July amid massive people’s protests that unseated Gotabaya Rajapaksa from his presidency. Shortage of fuel and power cuts that prevailed also contributed to the decline in industrial production during the month.
According to the latest data released by the Department of Census and Statistics, the Index of Industrial Production (IIP) fell 22 percent to 85.6 index points from a year ago, recording the lowest index value at least for the last 19 months.

The index fell 2 percent in July compared previous month’s production.  
The IIP provides information to gauge the industrial sector performance and forecast future economic performance.
July became a historic month for Sri Lanka as people’s protests forced the then President Gotabaya Rajapaksa to flee the country and resign in exile. 
Rajapaksa and his government’s gross mismanagement of the economy resulted in Sri Lanka defaulting on its debt for the first time in its history.

Inflation in Sri Lanka is running red-hot at over 65 percent with food inflation running over 90 percent. Since August, fuel shortage has eased with the introduction of a quota system while the power cuts have also eased with increased hydro electricity generation due to higher rains. 

During July, food production fell 24 percent while manufacturing of textiles fell 13.3 percent. Manufacturing of apparels however made some robust gains with 17.5 percent growth.
Manufacturing of paper and paper products in July fell 66.3 percent amid import restrictions on printing related materials while manufacturing of coke and refined petroleum products plunged 98.5 percent as the Sapugaskanda oil refinery remained non-operational.

 
However, industrial production in August is expected to have picked up considerably with the return of semblance of political stability under President Ranil Wickremesinghe, who was elected by the parliament. 
The fuel shortages and power cuts eased considerably in August while on September 1 Sri Lanka secured a staff deal with the International Monetary Fund for a 48-month, US$ 2.9 billion Extended Fund Facility.