Economists Opine Sri Lanka Should Focus On International Market

The recent United Nations Educational Scientific and Cultural Organization’s (UNESCO) report titled, “Tackling the COVID-19 economic crisis in Sri Lanka: Providing universal, lifecycle social protection transfers to protect lives and bolster economic recovery” has assessed the impact of the Covid-19 pandemic on the Sri Lankan economy.

- Nishantha Hewage

The report estimates that the Sri Lankan economy could shrink by 3%. It further mentions if the crisis persists for a six-month-period, the incomes of the citizens in Sri Lanka may fall by LKR 803 billion averaging LKR 134 billion a month. This represents 5% of the 2019 Gross Domestic Product (GDP)-the total value of goods produced and services provided in a country during a year. Given this backdrop the Daily mirror spoke to a few economists in Sri Lanka to assess prevailing economic condition and beyond.

Disrupted Economy

“However, after the lockdown, the country could control the spread of disease and was able to flatten the curve. Unfortunately, a few weeks back, another cluster of Covid-19 developed in the country. Now, some people are concerned about a second wave of Covid-19. It is said that a century ago, the second phase of a Spanish flu was deadlier than the first. So, would the second wave be inevitable? However, the impact would depend on the extent of the outbreak of the disease. One reason to keep in mind is that our airport is still closed,” said Senior Prof. Tikiri Nimal Herath of the University of Sri Jayewardenepura. He said that once the impact of the pandemic is analysed anybody can easily understand that the interruption of free movement, wearing masks and maintaining physical distance have undermined almost all economic activities in the market. “Consequently, demand as well as supply were affected and contracted. GDP also contracted steeply, income level came down and unemployment went up,” Prof. Herath added. He also made it a point that since the economic transactions were confined to the domestic market, foreign investments had been negatively affected.