As per the provisional estimates of the Department of Census and Statistics (DCS), the Sri Lankan economy grew by 4.4 per cent in real terms during 2016 compared to the growth of 4.8 per cent in 2015. Within this annual growth, Industry related activities grew notably by 6.7 per cent driven by construction related activities, while Services related activities grew by 4.2 per cent mainly with the expansion of financial services, insurance and telecommunications. However, Agriculture related activities contracted by 4.2 per cent in 2016, impacted by supply side disruptions on account of floods in the second quarter and drought conditions during the final quarter of 2016. In spite of challenging external factors such as adverse weather conditions and global developments, an acceleration of growth was observed towards end 2016 with the last quarter of 2016 recording a growth of 5.3 per cent, partly supported by the base effect.

The Manufacturing Sector PMI recorded an index value of 57.1 in February which is an increase of 0.9 index points compared to January 2017. This indicates that the manufacturing activities continued to expand in February 2017, largely attributable to increasing orders for the upcoming New Year season visible in New Orders sub-index. The Stock of Purchases subindex decreased in February as a result of the usage of stocks accumulated in January and the delays in delivering materials which is reflected by lengthening of Suppliers’ Delivery Time. The Employment sub-index also increased while Production sub-index remain unchanged. The less number of working days in February was highlighted as a constraint for increasing the production to meet the increase in new orders. Overall data points to an expansion where all the sub-indices are above the neutral 50.0 threshold. The expectations for activities indicated an improvement for the next three months.