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Wednesday, May 31, 2023

Sri Lanka’s economy contracts 3.6% in 2020

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Sri Lanka’s Gross Domestic Product (GDP) contracted 3.6 percent in 2020 compared to 2.3 percent expansion in 2019, displaying the severity of the disruptions caused by the COVID-19 pandemic on the island nation’s economy, despite the last two quarters of the year recording positive growth rates.

Sri Lanka’s economy contracted 1.8 percent in the first quarter of 2020, although the virus started to spread in the country in early March. But it was raging in China during the last quarter of 2019, from where Sri Lanka imported most of the inputs for manufacturing, including textiles.

During the second quarter, Sri Lanka experienced the full brunt of the virus, with complete lockdown orders implemented on the whole country for nearly one month, which resulted in the economy shrinking an unprecedented 16.4 percent.

The third quarter marked a recovery, with the economy growing by 1.3 percent, as restrictions on mobility eased and activities returned to near normalcy.

However, the emergence of a second COVID-19 wave in early October stemmed the recovery being fully extended to the fourth quarter, although the government’s decision to go for isolations instead of countrywide lockdowns helped the economy to grow at a pace of 1.3 percent in that quarter as well.

During the fourth quarter, both agriculture and industry activities of the economy expanded 1.3 percent each, while the services sector grew 1.9 percent.

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