1. GDP/GVA (at basic prices) growth is reviewed downwards to 3.4% instead of 3.5%, mainly due to the lower growth of Offshore Management Companies (OMCs).
2. Based on information on key sectors of the economy, the growth of GDP/GVA at basic prices is revised downwards to 3.4% from 3.6% as forecasted in September 2015.
3. Exclusive of sugar, the growth would be 3.5% compared to the previous forecast of 3.6%.
At industry level, the main changes compared to the figures published in September 2015 are:
(i) Sugarcane: a negative growth of -8.2% instead of 1.9%, based on a production of 370,000 tonnes of sugar instead of 410,000 tonnes.
(ii) Manufacturing: to grow by 1.5% instead of 1.9%, mainly explained by lower performance of sugar milling (-7.6% instead of 2.0%) and textile manufacturing (-1.0% rather than 0.5%).
(iii) Construction: a sharper decline of -4.3% instead of -2.6%, mainly explained by further delays observed in the implementation of both major public and private projects.
(iv) Accommodation and food service activities: a growth of 8.6%, higher than the 6.5% estimated earlier, based on revised forecast of tourist arrivals of 1,140,000 instead of 1,115,000.
(v) Public administration and defence; compulsory social securities: to grow by 2.3% instead of 3.5%, due to lower than expected number of new recruits.
Consumption and Saving
4. Final consumption expenditure of households and general government is expected to grow by 2.9%, same rate as in 2014. Gross Domestic Savings as a percentage of GDP at market prices would be 11.9 compared to 11.6 in 2014.
5. Total investment would continue to decline by -3.7% in 2015 after the -6.0% fall in 2014. Exclusive of aircraft and marine vessels, a drop of -1.0% is expected after the -5.3% registered in 2014.
(i) Private sector investment is expected to drop by -5.8% in 2015, after the negative growth of -8.4% in 2014. Exclusive of aircraft and marine vessels, the growth rate would be -5.8% compared to -4.2% in 2014.
(ii) Public sector investment would increase by 2.4% in 2015 compared to 1.8% in 2014. Excluding aircraft and marine vessels, public sector investment is expected to rebound by 14.6% in 2015 after a contraction of -8.8% in 2014.
(iii) Investment rate, defined as the ratio of investment to GDP at market prices, would decrease to 17.8% in 2015, from 19.1% in 2014. Exclusive of aircraft and marine vessels, the rate would be 17.8% compared to 18.6% in 2014.
(iv) Private investment rate would decrease to 13.0% in 2015 from 14.2% in 2014 and public investment rate would slightly decrease to 4.8% in 2015 from 4.9% in 2014.
(v) The share of the private sector in total investment is expected to decrease to 72.8% in 2015 from 74.4% in 2014 while that of the public sector would increase to 27.2% from 25.6%.
6. In light of information gathered on key sectors of the economy, GDP is forecasted to be around 3.9% for the calendar year 2016. Exclusive of sugar, the growth rate would be 3.8%.
The main assumptions used are as follows:
(i) Sugarcane: based on a sugar production of 390,000 tonnes, a growth of 4.8% is expected following the contraction of -8.2% in 2015.
(ii) Manufacturing: to expand by around 2.5%, higher than 1.5% in 2015, based on expected diversification of markets and an increase in the production of Small and Medium Enterprises (SMEs).
(iii) Construction: to recover by 2.0% after the contraction of -4.3% in 2015, assuming pick up of construction activities.
(iv) Accommodation and food service activities: a growth of 4.5% based on expected tourist arrivals of 1.2 million and forecasted tourism earnings of Rs 52 billion.
(v) Financial and insurance activities: to grow by 5.3% in 2016, slightly higher than the 5.2% growth registered in 2015, in line with the government strategy to attract world class liquidity providers, international broker firms, investment banks, insurance companies and fund managers.
(vi) Public administration and defence; compulsory social security: to expand by 3.5% considering expected increase in the level of employment in the public sector.