Columns

When people greet each other today with the traditional greeting “Subhaaluthavuruddak” it is more in hope that the New Year will be a happy one, more than the expectation of a bright and prosperous year ahead.

This New Year dawns at an inauspicious and difficult time for people, especially the poor and those losing their employment and income. A large number of people have to live in the midst of the fear of the coronavirus, shortages of food and other essentials, low or no income, unemployment and economic hardships. It is a worse blow to the economy than last year’s Easter Sunday bombing, as the entire economy has been disrupted and the livelihoods of many threatened.

Celebration

In contrast to the customary celebration of the New Year with kiribath, sweet meats and delicacies, this year’s celebration will be frugal as a large population of the country has been severely affected with inadequate or no income.

Informal daily paid workers constitute an estimated 59 percent of the non-agricultural workers, and they have no employment and income. Most of them do not have savings to tide over a period of unemployment. They are in a serious plight from which they could be saved only by the efforts of the Government to deliver free food and charitable community actions. Unfortunately on most occasions, the truly deserving do not get these benefits of food and money, unintended beneficiaries do, when such Government interventions take place.

Good harvest

Hopefully a good Maha crop had been harvested ahead of the New Year without much harvesting losses. This would undoubtedly give some reason to celebrate the New Year. A good Maha harvest could enhance the hard times the rural population has endured and it will provide a measure of protection from other adverse developments that can affect rural incomes. Urban workers in shut down enterprises and in the informal sector are worse off.

Economy

The state of the Sri Lankan economy is indeed depressing. Nearly all sectors of the economy have been adversely affected. Most serious has been the external sector. The trade balance is likely to be large owing to the fall in exports and the balance of payments would be in deficit by a large amount owing to the trade deficit, reduced earnings from tourism, lower workers’ remittances and low inflows of capital.

Exports

Reduced exports of manufacture goods and tea exports would tend to widen the trade deficit. However, reduced imports of non-essentials and fuel are likely to offset the trade deficit.

Even if the trade deficit is about last year’s US$ 8 billion, this would result in a larger balance of payments deficit owing to adverse developments in workers’ remittances, a precipitous fall in earnings from tourism, drying up of foreign investments and capital inflows. These would result in a large balance of payments deficit that can worsen the external financial position of the country.

Recovery

The alleviation from this dire state can only come with the recovery of the country’s economy, which is in turn dependent on the global economic recovery. Hopefully there would be a growth momentum at year’s end that would accelerate in 2021 and the next national New Year would be a Subhaaluthavurdak.

Hard times

The hard reality is that the months ahead will be a difficult time, especially for the poor and those who have lost their employment and incomes. The country’s exports and tourism have been severely affected. The setback to manufacturing and services is a huge loss to the economy. It affects the balance of payments, employment and incomes.

Hopes

At the dawn of the New Year, hopes and expectations are; the pandemic will be contained in the near future, the global economy will recover sooner rather than later and growth momentum will accelerate at the year’s end.

Yet there are no signs of either the end of the coronavirus pandemic or an economic revival. The only silver lining or glimmer of hope is China beginning to get its economy moving, and this will have ripple effects on other economies.

Global economic recovery

The alleviation of this dire state can only come with the recovery of the country’s economy, which is in turn dependent on the global containment of the virus and international economic recovery. Meanwhile, the Sri Lankan economy is in dismal state needing international assistance to overcome the current economic impasse.

It is only when the global economy starts moving that Sri Lanka’s import-export dependent economy can prosper. As the Sri Lankan economy has been battered by the global developments, its revival too would be dependent on the containment of COVID-19 and the pace of global economic recovery. At present there is no adequate evidence of either.

Summing up

At the dawn of this New Year, the hope is that the COVID-19 pandemic will be contained in the near future, and the global economy will recover and assist the revival of the Sri Lankan economy and improve the livelihood of a large number of people without employment and income.

However there are few signs of a flattening of the COVID-19 pandemic which is a prerequisite to a global economic recovery. The chances are, international travel will take a longer time and Sri Lanka’s tourism is likely to be at a low level this year. It is expected that there will be a big thrust in economic growth in 2021, which we will have to await.

In conclusion

Hopefully the more affluent in the community will lend a hand to ensure that everyone has their bare necessities of food to survive this period of hardship. At this time of dire need, social cohesion and a sense of community could alleviate the dire conditions of people. It is akin to the time when the tsunami devastated the country. It is a time for community actions to alleviate the misery of people. It is a time to live in hope and not despair.