Financial Times of the Daily Mirror: Agriculture lags, Services roar, Industry ticking: Central Bank on 2004 4Q economic growth
The growth for the year as a whole was consistent with the expected annual economic performance for 2004, though the deceleration in the fourth quarter raises concerns about the continued vulnerability of the economy, particularly the traditional agriculture sector, to weather conditions. Reforms in the Agriculture sector consisting of productivity improvement efforts through high yielding seed varieties, application of modern technology and efficient utilisation of water are critical in achieving a sustainable high growth in agriculture. A slow down in the growth of investment goods imports from the second half of the year and continuation of high oil prices could affect future economic growth. The impact of the tsunami disaster on the growth prospects for 2005 will largely depend on how fast the affected sectors will bounce back, as they have after previous setbacks, and the speed and efficiency of the reconstruction and rehabilitation process, both planning and implementation.
The economy grew by 4.4% in real terms in the fourth quarter of 2004 over a high base resulting from 6.6 growth recorded in the corresponding period of the previous year. While the Services and Industry sectors performed well, recording over 6% growth, the deceleration in the fourth quarter was mainly due to the poor performance in certain agriculture sub-sectors. On the basis of the most recent data, during the first three quarters of the year, the economy is estimated to have grown by 6.4%, 5.4% and 5.4%, respectively, while on an annual basis, it grew by 5.4% compared with the growth of 6% recorded in 2003.
Sector-wise, the Services sector, which has continuously recorded over 6% quarterly growth during the last 10 quarters, grew by 6.2% and contributed most to the overall economic growth. The Industry sector also grew by 6.2%, continuing at around the same growth rate recorded in the previous quarter. However, the contraction of the Agriculture sector, by 3.2%, mitigated the strong performance of these two sectors. In addition, economic activity during the last week of the quarter was affected by the tsunami tidal wave disaster that occurred on 26 December 2004. As around 85% of the country's coastal belt was devastated, the tsunami adversely affected fisheries, tourism, small industry and small scale wholesale and retail trading activities along the Southern and Eastern coastal belt, as well as the transportation and distribution network in and to the affected areas, thereby impacting on the quarterly growth rates in some of those sectors. Read the full report...
