August industrial production slips but holds at pre-pandemic levels

■ August IIP at 102.1 index points, down from 111.1 index points in July and 112.2 index points a year ago

Sri Lanka’s industrial production slipped in August amid deceleration in a few key sectors but held at prepandemic levels reached in July demonstrating resilience of the country existing industries and the new ones entering the sector buoyed by robust policy assistance.

The Index of Industrial Production (IIP), the official gauge of the health of overall manufacturing activities in the economy, was recorded at 102.1 index points in August, down from 111.1 index points in July and 112.2 index points in the same month last year, the data from the Department of Census and Statistics showed.

IIP provides a detailed breakdown of industrial activities and how they have changed their volumes in the short-term and their trends.

The index has stagnated between a narrow range of 103.9 index point and 116.5 index points from January 2019 to February 2020 with few swings at times of extreme disturbances to the manufacturing activities such as in the case of Easter Sunday attacks in April 2019 when the index plummeted to 96.9 points.

The index hit a nadir in April 2020 recording 49.7 index points due to interruptions to industrial activities caused by the curfews imposed to contain the coronavirus outbreak, with only a few industries in agriculture, food and beverage and export sector operating. But since then the index has been on an upswing. Beverage manufacturing activities and pharmaceutical products have continued to power the August IIP with a slip in food manufacturing, after making strong gains in July. Beverages advanced by 7.6 percent to 109.9 index points while manufacturing of pharmaceutical products and pharmaceutical preparations made gains by 10.8 percent to 111.9 index points from the same month last year. Food products, which made significant gains in July, slipped 3.5 percent to 106.6 index points in August from a year ago. Since the virus outbreak, there was a strong policy push for food and beverage manufacturing targeting both food security and exports and this appears to have yielded results. The August export earnings data also showed that food, beverage and tobacco exports had increased by 21 percent to US$ 40.8 million from the same month in 2019.

Manufacturing of tobacco products increased by 3.9 percent in August to 87.7 index points.

Manufacturing of wearing apparels continued to lag as it declined by 33 percent to 78.2 index points from a year ago as the demand remains still weak with key buying markets still battling the virus.however, manufacturing of textiles gained 2.4 percent to 127 index points.