COLOMBO: Sri Lanka’s gross domestic product expanded 3.9 percent in the second half of 2016 down from 5.3 percent a year earlier with agriculture shrinking 2.5 percent with some credit driven sectors growing by double digits.
Services, the largest sector in the economy, grew 4.9 percent in the second half of 2016, with finance and insurance growing at a blistering 14.9 percent, data from the state statistics office showed. Industry grew 5.2 percent in the second half of 2016, with construction expanding at 8.5 percent.
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But agriculture shrank 2.5 percent compared to an expansion of 8.1 percent a year earlier. In the second quarter of 2016, agriculture contracted 5.6 percent against an expansion of 10.4 percent a year earlier.
Central Bank data showed that Sri Lanka credit growth was strong despite monetary tightening and the economy recovering from de-stabilizing money printing in 2015.
In 2015 economic activity was driven by liquidity releases and outright printing of money which led to credit and import boom. However due to the way GDP is calculated (imports are subtracted) booms driven by money printing do not translate into value added.
A downturn can also be understated as collapsing imports help buoy GDP but actual economic activity can collapse.
