The Sri Lankan economy grew by 3.3 percent during the third quarter of 2017 (3Q17) compared to the corresponding quarter of last year, with continued contraction in the agriculture sector and slower growth in industrial activity contributing to the low growth rate, according to the Census and Statistics Department.
This was slower than the 4 percent GDP growth recorded for 2Q17 and 4.6 percent in the third quarter of the previous year (3Q16). Gross Domestic Product (GDP) for the third quarter was valued at Rs. 2.4 trillion. The services sector, which contributed 56.3 percent to GDP, increased by 4.3 percent year-on-year (YoY).
The financial services, telecommunication and human health services each grew by nearly 20 percent YoY, while insurance services grew by 10.9 percent YoY. The accommodation, food and beverage serving activities expanded marginally, matching the slow growth in the tourism industry.
Wholesale and retail trade and other personal services too expanded only marginally.
Meanwhile, the industrial sector, which contributed 27.8 percent to GDP, grew by 1.9 percent YoY. Manufacturing activities which represented the largest portion of industrial activities grew by 2.4 percent YoY.
One of the largest manufacturing industries; apparel, textiles and leather, grew by 7.9 percent YoY with the country regaining the GSP Plus preferential trade facility from the European Union, which imports a large portion of such Sri Lankan products.
The manufacture of metal products and non-metallic mineral products increased by double digits YoY. However, the industrial sector was weighed down by food, beverage and tobacco production—contributing 8.6 percent to GDP—which fell by 2.4 percent YoY.
Construction activities, which made up the second largest portion of industrial activities, grew by 2.6 percent YoY.
Meanwhile, the agriculture sector, which contributed 7.6 percent to GDP and was affected by severe drought and heavy rainfall during the past 24 months, contracted by 3.3 percent YoY, thereby continuing the negative growth witnessed in the past seven quarters.
Cultivation of rice, coconuts, vegetables and spices, as well as marine fishing recorded declines, with both rice and coconut value-addition to the economy falling sharply by 32.5 percent and 20.8 percent YoY respectively, contributing to increased inflation during the period as well.
However, rubber and tea cultivation recorded positive growth rates of 22.7 percent and 17.0 percent YoY respectively, while animal production and fresh water fishing grew as well.
Over the first nine months of this year, the country's GDP grew by 3.7 percent YoY, with the services sector growing by 4.2 percent YoY, the industrial sector growing by 4.5 percent YoY and the agriculture sector declining by 3.2 percent YoY.
The Central Bank is projecting the economy to grow between 4-4.5 percent YoY in 2017. Multilateral lending partners too are expecting similar results for this year.