Spotlight: Econ Op-eds in Summary (Week ended 17th June '20)
1. Rebooting Sri Lanka post-COVID-19
By: Dinesh Weerakkody
· In Sri Lanka, quick measures to contain the domestic spread of the virus and the policy action to provide relief to those adversely affected has mitigated the fallout to a large extent. However, policy measures are required to address the challenge of weathering the ongoing health crisis and its economic fallout, beyond the immediate measures.
· There is an urgent need now to reduce our reliance on our narrow economic base. Improving attributes such as entrepreneurship to seek out opportunities and to take calculated risks, encouraging innovation to create new products and processes that add value and good management is required to drive this change in a post-COVID-19 economy.
· This is mostly important due to a changing global landscape for investments. Technology now plays a major role as it changes the economics of how businesses can best structure their operations across countries, provides access to a talented work force worldwide and is important for economic creativity. With the competition for investment being intensified globally, this becomes crucial for Sri Lanka’s recovery.
2. Jumpstarting Sri Lanka’s tourism industry (Part 1)
By: Dr. Nicholas Ruwan Dias & Niresh Eliatamby
· Sri Lanka’s tourism industry employed nearly 400,000 by 2018, and involves nearly 40 other industries. Being one of the most heavily affected as a result of the pandemic, the resumption of tourism is crucial to the economy. However, significant risks also exist if this is done too soon.
· A three-phase strategy can help manage the situation. Beginning with domestic tourism, the number of international tourists can be gradually increased as the pandemic subsides internationally. Finally, Sri Lanka must be repositioned in the global market to attract high-end customers. This will require significant investments.
· The recovery strategy needs to address aspects including branding and marketing, customer relationship management and financial incentives to both the operators and guests. Finally, Sri Lanka also needs to keep a keen eye on its competition and the industry must have an action plan for the resumption of activity by setting appropriate KPIs.
3. Trade and balance of payments prospects this year
By: Dr. Nimal Sanderatne
· As a result of the overall situation, the country’s export earnings have seen a sub-par performance. It is affected on one hand by an ailing global economic landscape and on the other hand by a lack of production (as evident in tea exports). The only relief right now is falling import expenditures, mostly due to a fall in fuel prices. However, an increased trade deficit is still possible.
· While it is hard to measure the decreased tourist earnings and workers’ remittances, there is no uncertainty that both of them would decrease precipitously this year. This means that if the trade deficit increases, it would lead to a balance of payment deficit. This makes the management of the trade deficit that much more important.
· All things considered, it is vital that the trade deficit is contained by both revival of export earnings and a sharp decrease in import expenditure. It is only by containing the trade deficit to a limited amount that the balance of payments deficit could be contained and stopped from eroding foreign currency reserves.
(Compiled by: Chayu Damsinghe, Promodhya Abeysekara, & Eshan de Mel)
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