Columns

This year’s Aluth Avurudda is being celebrated today in the traditional manner with customs from time immemorial. The national New Year is being welcomed with family reunions, new clothes, playing raban, dancing, playing games and partaking of kiribath (milk rice) and sweet meats. These are the elements of the annual New Year festivities.

Time of Joy

It is a time of joy and merriment when the difficulties and cares of life are forgotten and everyone wishes each other a “subha aluth avuruddak” in spite of what the future may hold.

This Year

This New Year is of particular significance as it is the first after the election of the JVP/NPP government and is on the eve of the local government elections. The question uppermost in people’s minds is whether the economic conditions have improved. Is the New Year being celebrated in better conditions than last year?

Expectations

Despite the lapse of only a little over six months after the election of the new president, people’s expectations are high. Consequently, there is a degree of disillusionment with the government’s performance.

High prices

Low-income households have been affected by high prices of rice, coconuts and other basic food items. The shortfall in their production that the government has no control of was the root cause of the price escalation. Nevertheless, in the nature of our politics, the government is blamed and its popularity tarnished.

Intervention

The government’s desperate attempts to reduce prices through market interventions have not had an impact. Rice and other foods are freely available at high prices.

Opposition

Whether the high prices are strong enough to benefit opposition parties will be seen at the forthcoming local government elections on May 6.

Paddy harvest

Furthermore, this year’s celebration comes at a time of a lower paddy harvest of about a third of the average paddy harvest.

High prices

The high prices of basic foods and consumer items would no doubt have dampened the celebration. Many would be wondering whether this New Year is better than those of the recent high-living-cost years. The answer to this question is likely to vary and be coloured by political biases.

Global uncertainties

The year ahead is fraught with a great deal of economic uncertainty around the world owing to US President Donald Trump’s trade policies that most Sri Lankans would not be thinking of at this festive time. There is a prospect of our exports, especially garments, being reduced and large numbers of workers employed in factories likely to lose their jobs. Trump’s announcement on Wednesday giving a 90-day reprieve to several countries, however, comes as a relief.

Export earnings

Other repercussions of a likely global recession could be serious for our trade-dependent economy. Manufactured exports like solid tyres, ceramics and rubber manufacturers too could be adversely affected. The only likely relief may be from lower oil and fertiliser prices. Tourism, on which we are heavily dependent, is also likely to be adversely affected.

Economic uncertainties

The months ahead are full of economic uncertainty for us, as well as the rest of the world. The economy could be affected adversely by the high tariffs imposed by the US and a likely global recession.

Recession

The world economy is undergoing an unpredictable change that is likely to leave us in a poorer state. If the imposition of a massive 44 percent import duty comes into effect after the three-month reprieve, it will no doubt affect our export revenue. As much as 40 percent of our exports are to the US market. The main exports are garments, ceramics and solid tyres. Garment exports are likely to be affected seriously by the increased prices, with the US economy likely to be in recessionary conditions.

The price increase on Sri Lankan garments is likely to shrink demand drastically. This is especially so as our competitors in the garments trade, like Bangladesh and Vietnam, are imposed a lower rate of tariffs. About 40 percent of our garment exports are to the US, and garments are our main merchandise export.

Solid tyres

The export potential of solid tyres for heavy vehicles and aircraft is not likely to be severely affected by the price hike but could be affected by global recessionary conditions. Whether we could expand exports of solid tyres to countries like Russia, China and Europe remains to be seen.

Tea

The impact on our tea exports will be minimal, as the US is a small market for our tea, and increased prices may not reduce demand substantially. The recessionary conditions could affect our tourism and remittances.

Concluding reflections

All in all, the global developments portend a difficult economic future for the country. Next Sunday’s column will deal with these issues in more detail. Insofar as our people are concerned, today and the week ahead are a time of forgetting the cares of the working world, relaxation, family reunion and merriment.

Conclusion

Today’s celebration of the New Year may not be different from those of past years, but it is overcast with concerns of a global recession and the imposition of import tariffs reducing our exports that would affect the country’s export earnings, increase unemployment and reduce incomes. Tourist earnings and remittances too could make a dent in our foreign earnings and reserves.

Our New Year wish must surely be that these pitfalls would be averted somehow and the New Year would be a subha aluth avurudak.