MP Mahinda Rajapaksa: Twice ‘FALSE’ on GDP growth

Fact Check

In a statement made on the 25th of November on TV Derana, Mr. Mahinda Rajapaksa made the following claims:
1. During the 9 years he was President, the average growth rate of the economy was 7.4 percent; and
2. During that time period, per capita income of the country saw a threefold increase.

Is Mr. Rajapaksa correct in what he is saying?

In order to assess the accuracy of the claims, we referred to data on Gross Domestic Product (GDP) provided in the Central Bank of Sri Lanka Annual Report of 2017.

All data extracted from Central Bank reports and the relevant calculations are given in Exhibit 1.

To calculate the average growth of the economy during the 2006-2014 time period referred to by Mr. Rajapaksa, we averaged the figures in Column A of Exhibit 1. The calculation showed that the average growth rate was 6.4 percent, not 7.4 percent.
As such, the first statement made by Mr. Rajapaksa is false.

We then checked the second claim about how much real per capita income grew between 2006-2014.

To calculate the multiple by which real per capita income grew in this time period, we did the following.

Step 1: Calculated the population figures (Column D) as estimated by the government for each year. To do this, we divided the Nominal GDP (Column B ) by the Nominal Per Capita Income (Column C).

Step 2: Calculated the real per capita GDP in terms of [constant] 2005 prices (Column F). To do this we divided the real GDP figure (Column E) by the population figures (Column D).

Step 3: Calculated the multiple by which per capita GDP has grown between 2006-2014. To do this we divided the figure for real per capita GDP of 2014 (Rs. 206,644 Mn) by the figure for 2006 (Rs. 124,862 Mn). The multiple we got was 1.65, and not 3, as mentioned by Mr. Rajapaksa.

Thus, the second statement by Mr. Rajapaksa is also false.

However, if we calculate how much per capita income grew between 2006-2014 in US dollars, we get a figure of 2.7 instead of 1.65, which is close to the figure Mr. Rajapaksa quoted. This difference in the USD and LKR values can be attributed to the fact that between 2006 and 2014, the rupee depreciated against the dollar. However, since Sri Lankans purchase goods and services in Sri Lankan rupees and not in US dollars, this measure cannot be considered suitable to assess the actual income of people.

Taking all of this information into account, we have classified Mr. Mahinda Rajapaksa’s statement as ‘FALSE’.

Exhibit 1: Relevant data extracted and calculated from Central Bank of Sri Lanka Reports (2005-2014)