Under the new method of calculating gross domestic product (GDP) the size of Sri Lanka's economy was estimated at 2.7 trillion rupees in the first quarter of 2015. The diversity of the economy highlights the bigger contribution is from the services.
This is revealed by the data issued by the Census and Statistics Department.
The Census Department rebased national accounts estimates, which takes 2010 as base year, against 2002 used earlier, this shows the economy five percent bigger than under the previous calculation.
Economic analysts indicated the new data series captures several economic activities not counted under the earlier method and shows the level of annual GDP is significantly higher than under the old series with the size of the economy 14.4 percent bigger in the 2010 base year.
The department indicates the structural composition of the economy has changed after the rebasing due to revision of the reference year and other improvements made to the system in the rebasing process. According to the department the most significant implication is the reduction of the contribution of agricultural activities to the total GDP from 2010."
The contribution of agricultural and industrial activities decreased to 7.8 percent and 28.7 percent respectively under the new data series at current prices for the first quarter of 2015, compared with 13.3 percent and 32.6 percent under the old series.
The contribution of services activities increased up to 56.5 percent in the new series, from 54.1 percent in the old series, representing the trend towards services dominated economy.
A change in the contribution to the GDP growth rate has also shown.
Under the old series Agricultural, Industrial and Services activities made contributions of 1.3 percent, 33.3 percent and 65.4 percent to the overall growth rate of 6.4 percent. However in the new series, industrial activities contributed negatively to the overall growth rate in the first quarter of 2015.
The Census and Statistics Department believes that the GDP and the economic growth in the new series theoretically represent the real size and real rate of movement in Sri Lankan economy. The new data series has included 'Plant propagation' and 'Agricultural supporting activities' that were not covered earlier.
Manufacturing industry is identified in the most disaggregated level so that user convenience is enhanced; the new data includes sewerage and waste collection which were completely ignored in the old series. In the new series financial activities are classified in to two main activities namely, "Financial services except insurance and Pension funding and auxiliary activities" and "Insurance and Pension funding activities. All banking, Insurance and real estate activities were grouped in one single activity in the old series.
Furthermore the new series real estate is classified as a separate activity and not also not regarded as a financial activity.
Health and education services gross output and Gross Value Added are calculated and disseminated separately as these are crucial in the Sri Lankan economy. (RS)
Courtesy: Ceylon Financial Times 24 July 2015