What was announced were a series of measures to bring down the cost of living that were sweet to the ear. What is difficult to understand is how these measures would solve the problems announced by the PM? It appears that the government will take up the serious policy measures for development next year.

The Central Bank expects the economy to revive and register a growth of about 3.5 per cent this year. The Prime Minister has announced a similar expectation. It is on this recovery that the government expects to rebuild the public finances of the country. Is such an expectation of an economic recovery realistic?

The Central Bank announced that the economy grew by one tenth of one per cent in the first quarter of this year. This was in the view of the bank, a sign of economic recovery. The worst, it appears, is over. The Central Bank interprets this rise in the value of goods and services produced in the first quarter as a sign of a turnaround in the economy. Are we on a path of economic recovery and growth?

Many would be sceptical of this interpretation. There are many reasons for such scepticism. First of all the figure itself is not inspiring. A mere 0.1 per cent is neither here nor there. What is the big difference between a decline in growth and a 0.1 growth? Not very much. Too small indeed to make a fuss. Much ado about nothing! Interpreting such a minute growth as a positive sign is not convincing. Yet we must recognise that this growth is not in relation to the negative growth of last year. It is a comparison with the first quarter's growth of last year that was about 1.5 per cent. Therefore it is not as insignificant as it appears. It is however not very convincing when one looks at several statistics of economic performance that the Central Bank itself has released.

Tea production was down by 4 per cent, coconut production down by 6.5 per cent, industrial production in the private sector fell by 6.5 per cent and tourist earnings declined 31 per cent in the first quarter.

In a heavily trade dependent economy, the country's trade performance is a good indicator of the economic growth performance. Here too we see evidence of a downturn rather than a recovery. Exports declined by 15 per cent and imports by 16 per cent. The decline in imports means that several sectors of the economy, especially wholesale and retail trade and industrial production would be adversely affected. This is especially so as industrial raw material imports have declined by 11 per cent.

All these are indications of a decline rather than growth in the economy. Where then has the growth come from? There has been a slight increase in rubber and paddy production and perhaps in other food crops. If the decline in several agricultural crops and in industrial production, tourism and trade have been offset by increases in other agriculture, there is further good reason to doubt our economic growth statistic for the first quarter.

This is because the statistics of production of most of these crops are dubious.
Further the rise in prices of vegetables lends little support to the view that such crop production has increased. The signs of recovery are difficult to find in the statistics. The decline in imports of raw materials by 11 per cent and imports of investment goods by 25 per cent in the first quarter is an indication that the expected economic growth in the second quarter is quite unrealistic. Tea production continues to decline. Industrial exports have not picked up.

There is little hard evidence that the economy has in fact recovered to any significant extent. Let's face the fact that the economy is still in bad shape. There is little prospect that the figures for the second quarter would be better. Let us at least hope that the second half of the year would be one of at least modest economic revival.

The implications of the two statements on the economy are clear. Although we have a serious economic problem, the government is not willing to take unpopular measures for economic recovery. It prefers to postpone these till its own political future is more stable and a more durable peace enables a better economic performance.

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