President’s advisor is not “real” on SL’s growth since 1959

Fact Check

President’s advisor Sunanda Madduma Bandara claims that (a) since 1959 there has been a ‘massive’ (25 times) increase in income levels in Sri Lanka, and (b) its growth outperformed all South Asian countries.

To verify the claim, FactCheck.lk consulted the International Monetary Fund (IMF) World Economic Outlook 2023 and the Annual Report of the Central Bank of Sri Lanka (CBSL) 2022.

Claim (a): In claiming the massive increase, the president’s advisor cites per capita GDP increase in nominal USD terms. However, growth in income-level (which equates to purchasing-ability/production) is not measured in “nominal” terms—because an increase in the price of a product is not an increase in real production. It is measured in “real” terms—that is, the price/inflation adjusted increase in production. Therefore, “real” measures can be: (i) in LKR: the real per capita GDP growth in Sri Lanka, as reported by the CBSL, or (ii) in USD: the growth in the ability of Sri Lankans to purchase goods in the US (which is the nominal growth of Sri Lanka’s per capita GDP converted to USD and adjusted for inflation in the US).

Exhibit 1 shows that what is presented as a “massive” increase (of 25 times) is an average increase of 5.2% per year in “nominal” USD terms; and only 1.9% per year in “real” USD terms. However, the real growth in purchasing-ability in Sri Lanka, which is more pertinent to the claim, averaged 3.6% per year from 1959 to 2022 (see Exhibit 1).

Claim (b): Did Sri Lanka outperform all the countries in South Asia? For a comparison, FactCheck.lk could find data only from 1980 onwards.

Exhibit 2 shows that from 1980 onwards, Maldives and Bhutan outperformed Sri Lanka in “real” per capita GDP growth, both in local currency terms and in USD terms. Additionally, India outperformed Sri Lanka in local currency terms.

The claim is that Sri Lanka posted “massive” growth outperforming all others in South Asia. The analysis shows that the claim of “massive” results from mistaking “nominal” growth for “real” growth; and that three other South Asian countries outperformed Sri Lanka in real per capita growth (on available data, from1980).

Therefore, we classify the claim as FALSE.

Additional Note: This claim of the president’s advisor was situated in the context of many more claims about the improvement in other human development indicators as well. The present fact check only evaluated the claim relating to per-capita growth in income-level.

Exhibit 1: Change in GDP per capita in USD and LKR

Exhibit 2: From 1980 onwards Annualised Real GDP Growth of South Asian Countries

Note: Data for Afghanistan was not available