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by fireshelter Today at 12:25 am

» Who is a HNWI
by Yahapalanaya Yesterday at 9:41 pm

by Elahara Yesterday at 6:57 pm

» MULL heating up!
by anjelo Yesterday at 4:53 pm

» Save the stock market- and may be they (cse) will bring down the cse & sec levy.
by reyaz Yesterday at 3:07 pm

» AINV.N is ready to run ?
by Neluka Karannagoda Yesterday at 2:24 pm

» KGAL at LKR 70
by SIRRA123 Yesterday at 12:50 pm

by SIRRA123 Yesterday at 12:20 pm

» HEXP Starts Next Run to Rs.300
by J-CAT Yesterday at 11:51 am

» ACME & LCEM ??
by Tissa Yesterday at 11:34 am

» CFVF run Will start soon
by kjojo Yesterday at 10:54 am

by worthiness Yesterday at 10:50 am

» Fresh cut bank instrument for lease/sale, such as BG,SBLC, MTN, Bank Bonds
by jonbroker Yesterday at 10:24 am

» Penny TESS 7.4Mn trade volume!
by anjelo Yesterday at 9:21 am

» Financial Instrument- Lease BG/SBLC
by leasingmandate Yesterday at 4:36 am

» PABC : This must pass 20 rs. level very soon
by soileconomy Thu Oct 19, 2017 9:31 pm

» Today run LOFC 5+
by kjojo Thu Oct 19, 2017 8:25 pm

» Planning to buy some shares - Suggession please
by sanjulanka Thu Oct 19, 2017 7:33 pm

» Comparison TAFL,BFL & GRAN
by TARGET Thu Oct 19, 2017 7:14 pm

» LLUB - At the Current Price
by kjojo Thu Oct 19, 2017 5:49 pm

» Positive Trends.. Exports up..
by ranferdi Thu Oct 19, 2017 5:03 pm

» LCEM 10/-.......
by kjojo Thu Oct 19, 2017 2:46 pm

» KZOO ... KZOO ...Stock Buy Back underway ?
by Namal Thu Oct 19, 2017 1:32 pm

by Wimal Modawansa Thu Oct 19, 2017 9:09 am

» The New Pope: Bergoglio of Argentina
by leasingmandate Wed Oct 18, 2017 5:41 pm

» කිංස්බරි හෝටලයේ විදුලි සෝපානය මනාලයා සමග හිරවේ.. මංගල උත්සවය ජංජාලයක් වෙයි.. මනාලයා වන්දි ඉල්ලා නඩු යයි.
by trasantha Wed Oct 18, 2017 8:03 am

» UDPL Next Run soon
by kovida Tue Oct 17, 2017 10:58 pm

» Financial Instrument- Lease BG/SBLC
by leasingmandate Tue Oct 17, 2017 2:39 pm

» HVA.............? wtz gonna happen with HVA?
by anjelo Tue Oct 17, 2017 1:53 pm

» watch CSF
by kjojo Tue Oct 17, 2017 12:21 pm

» ගංගා මෑණියන්ගේ බැල්ම ලගදිම කොටස් වෙලදපොල දෙසට
by ranferdi Tue Oct 17, 2017 7:57 am

» + Point for Market : IMF reaches staff level agreement on third review of Sri Lanka’s EFF
by Ran49 Tue Oct 17, 2017 7:16 am

» Hotels face tough time --- Drop in tourist arrivals predicted/so many new hotels are opening
by kcrRanz Tue Oct 17, 2017 4:55 am

» Asian shares conquer 10-year peak
by kcrRanz Tue Oct 17, 2017 4:51 am

» Ideas about SCAP.N000 ?
by kcrRanz Tue Oct 17, 2017 4:40 am

» Why CSEC going up....???
by kcrRanz Tue Oct 17, 2017 4:30 am

» why bfl...gran...tafl...not moving
by kcrRanz Tue Oct 17, 2017 3:17 am

» Time to Talk About How Budget 2018 will Help for Us!
by Dailytrader Mon Oct 16, 2017 7:02 pm

by Roshan Fernando Mon Oct 16, 2017 2:11 pm

» LOFC 7+ next week
by kjojo Mon Oct 16, 2017 12:41 pm

by niru Mon Oct 16, 2017 11:43 am

by Namal Mon Oct 16, 2017 10:54 am

» From today - Watch Watch
by Richman Mon Oct 16, 2017 8:44 am

» IS CTBL.N ready to run ?
by Richman Mon Oct 16, 2017 8:43 am

» Sri Lanka tea prices seen remaining high on global shortfall
by Wimal Modawansa Mon Oct 16, 2017 8:10 am

» Recommended buys in planation
by Wimal Modawansa Mon Oct 16, 2017 8:08 am

by worthiness Sun Oct 15, 2017 1:38 pm

» Plantation Sector Summary
by Wimal Modawansa Sun Oct 15, 2017 7:28 am

» BUY CFT with expect to cross share 10+
by sameboy Sat Oct 14, 2017 12:53 pm

by gdid Fri Oct 13, 2017 5:32 pm

» WATA N00000
by gdid Fri Oct 13, 2017 5:29 pm

» MAL N and X
by Captain Fri Oct 13, 2017 12:05 pm

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by Captain Fri Oct 13, 2017 11:54 am

by kjojo Fri Oct 13, 2017 11:42 am

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by anjelo Fri Oct 13, 2017 8:58 am

» LIOC run Just started
by Ran49 Fri Oct 13, 2017 7:28 am

» LIOC is going to increase oil price
by SIRRA123 Thu Oct 12, 2017 9:06 pm

» See what these UNP criminals has done to our EPF and ETF, We have to burn these fellas
by Ryan Hudson Thu Oct 12, 2017 7:57 pm

by newone Thu Oct 12, 2017 5:41 pm

» Heavy rainng......But still VPEL & HPFL at very low price
by newone Thu Oct 12, 2017 5:35 pm

» TKYO - Capital Trust Recommends BUY
by Maxime Thu Oct 12, 2017 3:17 pm

by Namal Thu Oct 12, 2017 2:26 pm

» DOCK FUTURE hit 120 share
by kjojo Thu Oct 12, 2017 1:58 pm

» keey eye on DOCK
by kjojo Thu Oct 12, 2017 12:37 pm

» look MULL. Today Run
by TuTanKaman Thu Oct 12, 2017 12:25 pm

by DHAVER88 Thu Oct 12, 2017 12:15 pm

» Aitken Spence - Prospects
by MasterD Thu Oct 12, 2017 10:41 am

» NDB Bank PLC
by MasterD Thu Oct 12, 2017 10:38 am

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by MarketWch Thu Oct 12, 2017 10:36 am

» Correct time to buy DFCC
by Harry82 Thu Oct 12, 2017 9:28 am

by samaritan Thu Oct 12, 2017 9:20 am

» Watch the followings
by Harry82 Thu Oct 12, 2017 9:03 am

» WHERE IS down.......ASI 5700...
by kjojo Thu Oct 12, 2017 9:01 am

» Bank Guarantee/StandBy Letter of Credit(MT760),Project Funding,MT103,Loan.
by kimsungnyon010 Thu Oct 12, 2017 8:17 am

» Bank Guarantee/StandBy Letter of Credit(MT760),Project Funding,MT103,Loan.
by kimsungnyon010 Thu Oct 12, 2017 8:16 am

» Bank Guarantee/StandBy Letter of Credit(MT760),Project Funding,MT103,Loan.
by kimsungnyon010 Thu Oct 12, 2017 8:13 am

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by Yahapalanaya Thu Oct 12, 2017 5:20 am

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» Stock Market Entertainment
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» LLMP N0000
by kjojo Wed Oct 11, 2017 12:54 pm

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by prasa2004 Wed Oct 11, 2017 8:51 am

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by Tissa Tue Oct 10, 2017 10:31 am

» UDPL Lead the Plantation
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» Financial Instrument- Lease BG/SBLC
by leasingmandate Tue Oct 10, 2017 4:32 am

» ready to ACME blast
by gayanath1983 Mon Oct 09, 2017 3:06 pm

» ACME 9+ Coming soon
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» World bank confirms bribery involving Maithri –Australian Co. that gave it blacklisted
by samaritan Mon Oct 09, 2017 2:14 pm

Insights into Sri Lanka’s re-based GDP estimates

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Insights into Sri Lanka’s re-based GDP estimates

Post by Melissa Pereira on Wed Sep 23, 2015 9:21 am

Sri Lanka’s re-based GDP estimates suggest that the economy has grown by 5.5 per cent in the first half of 2015. The figures rely on the re-basing of the country’s national accounts compilation undertaken by the Department of Census and Statistics (DCS). The most current approximations were based on 2002 production and consumption patterns. Over time, this one-year snapshot of the economy becomes less accurate and can lead to overestimation of traditionally dominant sectors such as agriculture and underestimation of newer sectors, especially those in the industry and services sectors.
The IMF statistical division recommends a change of base year every fifth year. Sri Lanka has not done so since 2002 suggesting that the previous GDP framework underestimated economic activity. The re-basing uses 2010 as the new base year, and includes expanded coverage of economic activities through information collected by various censuses. This, together with other changes such as a shift towards the 2008 System of National Accounts,re-classification of economic activities as per the International Standard of Industry Classification (ISIC), etc., will also mean changes in the sectoral composition of GDP. In total, the old and new national accounts will not be comparable.
While data challenges remain in any attempt to compile national accounts, additional complexities exist to accurately estimate the size of Sri Lanka’s significant informal economy. Notwithstanding such weaknesses, a regular re-basing exercise is extremely useful to provide a clearer picture of an economy’s size and structure and allow a better planning of longer term growth and development options.
The DCS’ statistical exercise has produced revised nominal and real GDP estimates for Sri Lanka for the period 2010-14. At the aggregate level, the re-basing exercise suggests that share of agriculture in GDPis smaller and that of industry is larger than previously estimated, and that the Sri Lankan economy continues to be a services sector dominated one. This is not surprising in view of expanded activities involving sectors such as telecom, information technology, etc., that is better captured with fresh sources of data.
The re-basing also shows that the absolute size of the Sri Lankan economy in 2010 was larger by over 14 per cent at nominal prices than previously estimated, but that this difference has shrunk gradually to 5.6 per cent by 2014 (Figure 1). If differences are significant, GDP re-basing can lead to changes in key indicators, albeit as cosmetic alterations; for example, Sri Lanka’s per capita GDP has risen to US$ 3,795 in 2014 from the previously estimated US$ 3,625 as a result of the re-basing. At the same time, the increase has not been sufficiently large to significantly impact the country’s fiscal deficit-to-GDP or public debt-to-GDP ratios, and as such, holds limited broader economic consequences.
Rebasing, however, matters if GDP growth rates are an important consideration for governments. Slower real growth after a re-basing exercise is a fairly common and accepted occurrence, as witnessed in many of the African countries that have done similar exercises. This is because with economic growth, changes in relative prices are to be expected; in effect, re-basing of real GDP means adopting a new set of reference prices to value output in each year.If there has been fairly strong economic growth and relative prices have changed, then almost certainly the first year will have a higher measured real GDP when national accounts are re-based. With a higher initial level of GDP, the growth rate can turn out to be smaller in subsequent years.
What is puzzling in Sri Lanka’s re-based real GDP growth is that even as output moves to a higher base in 2010, significantly high growth rates are recorded in the immediate years thereafter (Figure 1). In 2011-12, GDP growth appears to have averaged 8.8 per cent per annum, well ` excess of the 7.3 per cent growth under the old GDP base (Table 1). GDP growth sees a sharp fall during 2013-14, shrinking to a rate of 4 per cent per annum. Thus, Sri Lanka’s real GDP growth after re-basing – measured by reference to the prices and structure of the economy in 2010 – appears to have grown at varying rates, recording high growth initially and tapering off sharply in subsequent years.The sharp volatility in growth of the re-based GDP series is even more evident from quarterly estimates (Figure 2).
The DCS has devised a GDP implicit price deflator with a revised base year of 2010 – with weights assigned to capture price changes and derive constant value added. The new GDP deflator shows significant volatility against not only the old GDP deflator, but also against the Colombo Consumers’ Price Index (CCPI) - (Table 1). The data and methodology employed in re-basing Sri Lanka’s constant price GDP estimates thus need further study and clarification to understand underlying price movements. For now, on the assumption that the broad trends of a higher revised economic base is correct, the preliminary data does suggest that Sri Lanka is most likely to experience a slower rate of economic growth than seen in the recent past.
Courtesy: The Island 22 September 2015

Melissa Pereira
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

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