Encouraging results

Last week's data on the Gross Domestic Product for 1999 released by the Central Office of Statistics show that nominal GDP in 1999 was Lm84.4 million higher than the corresponding value on 1998. Translated into real terms, this amounts to a 4.6 per cent GDP increase in 1999 compared to the 3.4 per cent increase recorded in 1998, and is welcome news. The 1999 data shows a number of growth sectors driving the economy forward.

The private services sector expanded by nine per cent, the transport and communications sector by 7.5 per cent and the manufacturing sector by 5.2 per cent. This expansion was reflected in a net increase of over 1,500 jobs in the private sector during 1999 compared to half that amount of new private sector jobs created in 1998.

In the year under review, total demand surged by a real Lm161.8 million or 6.6 per cent to Lm2,621 million from Lm2,459.2 million in the previous year.

This increase was generated by increased consumer demand, higher capital formation and an improved performance in the export-led sectors of the economy and is perhaps an indication of the fact that the economy is on the mend, however slow the process might be.

There are other positive figures: Real Consumption Expenditure went up by Lm42 million or 5.4 per cent to Lm823.4 million from Lm781.4 million in 1998. In 1998 the increase over the previous year was 2.5 per cent.

The figures related to exports are also encouraging: At Lm1,238.3 million, the exports of goods and services increased by Lm101.2 million or 8.9 per cent from Lm1,137.1 million a year earlier. In the previous year, the export-led sectors of the economy grew by another 8.1 per cent.

The improvement in the manufacturing sector's contribution to GDP, after years of continual decline, is good news. This contribution increased by Lm14 million or 5.2 per cent to Lm285.3 million from Lm271.3 million a year earlier. In this sector, earnings from employment went up by Lm5.7 million or 3.6 per cent to Lm164 million from Lm158.3 million in 1998. The sector's profitability increased by Lm8.3 million or 7.4 per cent to Lm121.3 million from Lm113 million in 1998.

The insurance, banking and real estate sector - a success story, grew by 3.9 million or four per cent to Lm100.9 million from Lm96.9 million a year earlier. In this sector, earnings from employment went up by Lm5.4 million or 14.7 per cent to Lm42 million. Another successful sector in 1999 was the transport and communication sector which also improved over the performance in 1998. At Lm81.5 million, this sector grew by Lm5.7 million or 7.5 per cent from Lm75.8 million a year earlier. This sector's contribution to the GDP went up to 6.5 per cent from 6.3 per cent in the previous year.

The private services sector improved its contribution to the GDP by Lm12.1 million or nine per cent to Lm146.4 million from Lm134.3 million in 1998. As a result the sector's relative share of the GDP increased to 11.7 per cent from 11.2 per cent a year earlier. This is a very positive result indeed.

Some sectors' performance, however, remained weak. Activity in the agriculture and fisheries sector contracted by Lm0.9 million or 2.7 per cent to Lm31.7 million from Lm32.6 million a year earlier. This sector's relative share of the GDP contracted to 2.5 per cent from 2.7 per cent in 1998. This seems to be an irreversible trend which cannot be rectified. There has been a decline in this sector's contribution to GDP every year throughout the last decade.

Perhaps one of the most disappointing performances was by the construction and quarrying sector. At Lm32.4 million, this sector's contribution to the GDP dropped by Lm3.6 million or 10.1 per cent to Lm32.4 million from Lm36.1 million in the previous year. This sector's relative share of the GDP contracted to 2.6 per cent from 3.00 per cent in 1998. Both employment income and the sector's profitability declined. The sector's contribution to GDP has been declining almost every year since 1992 which is a clear sign that we should not be over-dependent on construction for economic growth. After a while, there will be little left where to build.

On the whole, the these latest figures for our GDP are quite encouraging and one hopes that this is the start of an economic revival which we so badly need.