1.0. inflation, price levels, rate of growth, national income,

1.0.        About Macroeconomics

Macroeconomics derived from economics its focus on government. Macroeconomic shows how the total economy behaves in a country. In macroeconomics, a multiplicity of economy-wide phenomena is systematically studied such as, inflation, price levels, rate of growth, national income, gross domestic product and changes in unemployment. Macroeconomic emphases on developments in the economy and how the economy changes as an entire.

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1.1.         The Study of Macroeconomics

Macroeconomics study combined point out such as unemployment rates, GDP and price indices, and then evaluate how changed segments of the economy relate to unique, further to recognize how the economy functions. The macroeconomic operating an advanced models and explaining the relationship between a variation of an issues such as consumption, inflation, savings, investments, international trade and finance, national income and output. Willfully, microeconomics analyzes how individual agents act, namely consumers and corporations, and studies how these agents’ behavior affects quantities and prices in certain markets. Macroeconomic models, explains about the models forecast, these are used by government. It helps and open the way for the new contracture and beings to aid in the structure and evaluation of economic policy.

 

 

 

                                                 

 

 

 

 

 

 

2.0.        Sri Lankan Economy over

GDP grew by 3.8% in the first quarter of 2017 and 4.0% in the second to hold growth in the first half of 2017 to 3.9% year on year, not changing from the 2016 outcome. Agriculture was a major drop in the first quarter by continuing lack, causing a 3.2% decline. Majority of the farmers had to face drawbacks due to rice production fell by 53%, and that was the period were significant declines in tea and rubber, major exports crops. Floods in the second quarter shrank agriculture by 2.9% with further rice loses, even as tea and rubber recovered later last year 2017 (ADB, 2017)

Household expenditure and numerous key export commodities are expected to get a further boost from the ongoing recovery of the agricultural sector, which should also contribute to more broad-based GDP growth in 2018. Moreover, tourism and construction should again boost growth. Our panelists expect GDP growth of 4.6% in 2018, down 0.1 percentage points from last month’s forecast, and 4.9% in 2019. (focus-economics, 2017)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.1.        India Economy

India’s economic recapture in progress taking hold following a lackluster performance in 2017. The economy grew at a faster 6.3% in year-on-year terms in Q2 FY 2017—which runs from July to September—with the effects of demonetization and the execution of the Goods and Services Tax (GST) gradually dissipating. Although the fourth seems to be less, with seasonal effects dragging on economic activity in October, stronger data for November, including auto sales and the manufacturing PMI, suggests that the economy remains on a recapture path. Meanwhile, Moody’s upgraded the country’s sovereign issuer ratings to Baa2 from Baa3 in mid-November. The ratings agency expects the government’s reform agenda to unleash India’s growth potential and help drive down the government debt burden over the medium term, thus warranting a higher credit rating. (focus-economics, 2017)

India has a good breakthrough in macroeconomics, following data shows, the last Economic Survey (2014-15) for instance, predicted 8%-plus GDP growth, with actual growth turning out to be a little less (7.6%)., India’s population increase is high, that’s the strength of a developing country. (focus-economics, 2017)

2.2.         Comparison on Both country

Year

Description

SL

India

2016

Nominal GDP MN

81,322

2,263,793

2016

GDP Growth Rate

4.4

7.1

2016

GDP Deflator

131.4

124.6

2016

Annual CPI Growth rate

134.1

155

 

Employment number – % of total population

49

52

2017

Labor Force (000′)

8,666.88

520,199.01

 

Unemployed

 

 

2016

Unemployment Rate (National Estimate – % of labor force)

4.4

 

2016

inflation rate

3.7

4.9

Table 1

*Both the countries are in developing stage,

 

 

                       

 

3.0.         Sri Lankan population

(Registrar General’s Department, 2017)

          Table 2 (World Bank, 2017)

Graph 1 (Registrar General’s Department, 2017)

3.1.            Sri Lanka Population Gender wise

                         

 

Table 3 (World Bank, 2017)

Graph 2 (Registrar General’s Department, 2017)

Compare to the 1960’s population the rate of population decreasing the total population taken by ten years.

21%

15%

14%

8%

7%

6%

1970

1980

1990

2000

2010

2017

Table 4

Currently Sri Lankan population growth rate shows 1.1%, it shows decreasing of human resource, both the countries are shows up same growth rate in 2016/2017

 

4.0.         Nominal GDP of Sri Lanka and India

                                  

 

 

 

 

 

 

 

 

 

                Graph 3

 

 

GDP at existing market prices was estimated at Rs.11, 839.0 billion (US dollars81.3 billion) in 2016, while it stood at Rs.10, 951.7 billion (US dollars 80.6 billion) in 2015. Accordingly, GDP in nominal terms grew by 8.1 per cent in 2016 compared to 5.7 percent growth recorded in 2015. This increase was largely attributable to the upturn in GDP implicit deflator which increased to 3.6 per cent in 2016 from its 0.8 per cent growth in 2015. Meanwhile, the GDP increased at constant market prices to Rs.9, 012.0 billion in 2016 in comparison to Rs.8, 633.9 billion in 2015 recording a 4.4 per cent growth in real terms in 2016 compared to 4.8 per cent growth in 2015. (Central Bank of SriLanka, 2016)

Reason for fall of GDP srilanka has fallen in the service sector early 2012 highly result oriented sector fallen in 2017. Further srilankan mainly depend on imports this leads to spend more money to outside the country.  2017 industry has increased due to few new investments took place, but tea and rubber, other agriculture  fallen and given a loos due to bad weather condition and other external factors. Anyway srilanka’s GDP in the ideal range, and healthy economic condition. If it’s less than 2-3% is critical condition, but SL GDP rate is healthy it’s above 4.5%.

 

 

 

 

 

 

 

 

 

Graph 4

Years

2014-15

2015-16

2016-17

GDP

7.5

8.0

7.1

Table 5

Flowing sectors are badly contributed to the Indian economy growth, as per the article it shows the manufacturing sector, as a sub-set of industry, led the growth tumble, expanding by just 1.2% in the quarter, compared with 5.3% in the previous quarter and 10.7% a year ago. This was the worst quarter for Indian manufacturing in five years. Overall industrial output also collapsed to 1.6% growth from 7.4% a year ago and 3.1% in the previous quarter.

The construction sector that has been the bulwark of job creation grew by just 2% (in GVA terms) as it grapples with the headwinds of a new regulatory regime (RERA), the GST and leveraged balance sheets of developers. Mining GVA shrank by 0.7%, compared with a 0.9% dip last year.

The services sector offered some semblance of stability, growing at 8.7% compared with 9% in the same quarter last year, but a deeper look suggests this was driven by a rise in trade-related GVA to 11.1% (from 8.9%). This is proof of sorts that the destocking in manufacturing was reflected in higher volumes (often discount-driven) in the trade segment. Agriculture GVA dipped from 2.5% in the first quarter of last year to 2.3%, though crop output increased healthily. Low prices for crops apart, it appears that other agriculture-related activities, such as animal husbandry, have dragged down the sector’s overall growth. Economists agree the optimal GDP growth rate is greater than 2 percent but less than 4 percent.

 

 

 

5.0.         Annual Real GDP Growth Rate.

Year

2016

2015

2014

India

7.6

7.6

7.2

Srilanka

4.5

4.8

4.9

Table 6

Graph 5

Sri Lanka is struggling to stand financial development while maintaining macroeconomic stability under an IMF program. The government’s high dues and overstuffed public sector service cadre, which have contributed to historically high budget deficits and low tax revenues, remain a concern. Government debt is about 77% of GDP and remains among the highest of the developing markets.

The new government in 2015 drastically increased wages for public sector employees, which boosted demand for consumer goods but hurt the overall balance of payments and reduced foreign exchange reserves.

Tourism has experienced strong growth during recent years following the determination of the government’s 26-year conflict with the Liberation Tigers of Tamil Eelam. The government has been pursuing large-scale rebuilding and expansion projects in its hard work to incentive growth.

Comparing with Indian GDP it’s growing but srilankan GDP declining this is due to Sri Lanka’s exports are woefully inadequate to finance the country’s imports, they have declined as a proportion of GDP and the export share in world trade has decreased.

India experiencing a sustainable growth over the past years this cause of the slower growth is due to the decline in inventories ahead of the rollout of GST combined with the Demonetization exercise. The rate has come down predominantly due to pre- GST effect as manufacturers were focusing more on clearing the existing stock.

6.0.         GDP Deflator

6.1.            Sri Lanka

GDP Deflator in Sri Lanka increased to 131.40 Index Points in 2016 from 126.80 Index Points in 2015. GDP Deflator in Sri Lanka averaged 130.39 Index Points from 2002 until 2016, reaching an all-time high of 197.42 Index Points in 2009 and a record low of 100 Index Points in 2002.

 

 

 

 

 

 

Graph 6

6.2.            India

GDP Deflator in India increased to 124.60 Index Points in 2017 from 120.20 Index Points in 2016. GDP Deflator in India averaged 117.47 Index Points from 2005 until 2017, reaching an all-time high of 146.50 Index Points in 2011 and a record low of 100 Index Points in 2005.

Graph 7

 

7.0.         Annual CPI Growth Rate

 

 

 

 

 

 

 

 

 

Graph 8

Consumer price index has been growing and purchasing power increasing form the consumers, they are willing to spend

 

 

 

 

 

 

 

 

 

Graph 9

Indian CPI also share the same result but it has a sustainable buying power, unlike srilankan CPI. Gradually increases the CPI.                                          

 

 

 

 

 

 

8.0.         Employment Number

8.1.            Srilanka

The number of employed persons in Sri Lanka increased to 8163869 in the third quarter of 2017 from 8138728 in the second quarter of 2017. Employed Persons in Sri Lanka averaged 7082800.55 from 1990 until 2017, reaching an all-time high of 8554179 in the third quarter of 2015 and a record low of 4962105 in the fourth quarter of 1992.

Graph 10

8.2.            India

The number of employed persons in India increased to 29650 Thousand in 2012 from 28999 Thousand in 2011. Employed Persons in India averaged 25169.51 Thousand from 1971 until 2012, reaching an all-time high of 29650 Thousand in 2012 and a record low of 17491 Thousand in 1971.

 

 

 

 

 

 

 

 

 

Graph 11

9.0.         Labor Force

Labor Force Participation Rate in Sri Lanka decreased to 53.60 percent in the third quarter of 2017 from 53.90 percent in the second quarter of 2017. Labor Force Participation Rate in Sri Lanka averaged 50.30 percent from 1990 until 2017, reaching an all-time high of 54.70 percent in the first quarter of 2017 and a record low of 46.90 percent in the third quarter of 1992.

Labor Force Participation Rate in India increased to 52.50 percent in 2013 from 50.90 percent in 2012. Labor Force Participation Rate in India averaged 52.10 percent from 2011 until 2013, reaching an all-time high of 52.90 percent in 2011 and a record low of 50.90 percent in 2012.

10.0.    Unemployed                                      

The number of unemployed persons in Sri Lanka decreased to 358350 in the third quarter of 2017 from 380594 in the second quarter of 2017. Unemployed Persons in Sri Lanka averaged 495841.86 from 1990 until 2017, reaching an all-time high of 953794 in the fourth quarter of 1990 and a record low of 282648 in the second quarter of 2012.

The number of unemployed persons in India decreased to 44.85 Million in 2016 from 48.26 Million in 2014. Unemployed Persons in India averaged 30.60 Million from 1971 until 2016, reaching an all-time high of 48.26 Million in 2014 and a record low of 5.10 Million in 1971.

In India, the number of unemployed persons refers to number of persons on the live register. Live Register is the systematic arrangement of Index Cards pertaining to applicants who are in need of employment assistance

 

                                        

 

 

 

 

 

 

11.0.    Unemployment rate

Unemployment Rate in Sri Lanka decreased to 2.10 percent in the fourth quarter of 2017 from 4.40 percent in the fourth quarter of 2017. Unemployment Rate in Sri Lanka averaged 7.91 percent from 1991 until 2017, reaching an all-time high of 16.60 percent in the second quarter of 1992 and a record low of 2.10 percent in the fourth quarter of 2017.

 

 

 

 

 

 

 

 

 

Graph 12

Unemployment Rate in India decreased to 3.46 percent in 2016 from 3.49 percent in 2015. Unemployment Rate in India averaged 4.08 percent from 1983 until 2016, reaching an all-time high of 8.30 percent in 1983 and a record low of 3.46 percent in 2016.

In India, the unemployment rate measures the number of people actively looking for a job as a percentage of the labor force.                                   

Graph 13

Unemployment Rate. Percentage of employable people actively seeking work, out of the total number of employable people; an unemployment rate of about 4% – 6% is considered “healthy”. Both the countries are healthy and they are maintaining it to 4%-3%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.0.    Consumer Price Index

12.1.        Energy Related And Service Sector Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                               

 

 

Consumer prices in Sri Lanka increased 7.1 percent year-on-year in December of 2017, easing from a 7.6 percent rise in the previous month. Prices rose at a softer pace for clothing and footwear (6.0 percent compared to 6.6 percent in November). Meantime, cost advanced faster for food and non-alcoholic beverages (14.4 percent compared to 13.8 percent); housing utilities (0.3 percent compared to 0.2 percent); recreation and culture (2.6 percent compared to 0.4 percent) and miscellaneous goods and services (13.2 percent compared to 12.7 percent). In addition, inflation was steady for transport (4.0 percent, the same as in November). On a monthly basis, consumer prices increased 0.6 percent, after a 1.2 percent increase in the prior month. Inflation Rate in Sri Lanka averaged 9.63 percent from 1986 until 2017, reaching an all-time high of 28.30 percent in June of 2008 and a record low of -0.90 percent in March of 1995.

 

 

 

 

 

 

 

 

 

Graph 14

12.2.        CPI Transportation

 

 

 

 

 

 

 

 

Graph 15

 

The transportation sub-index of the CPI basket in Sri Lanka increased 94.6 in 2015 it was 2015 Jan 96.2 index points and then drastic drop in the mid months, then sudden hike in November, December 2015.