Spotlight: Econ Op-eds in Summary (Week ended 3rd November '21)
1. Food shortages soaring prices and lack of fertilisers threaten livelihoods
By Nimal Sanderatne
The country’s economic problems have been worsening during the course of the year, with foreign reserves falling drastically, while the continuing widening of the trade deficit and deterioration of the balance of payments, threatening a further depletion of the foreign currency reserves.
Rising import expenditure is expected to be a severe burden in 2022 owing to higher imports of food, fuel and other essentials whose international prices are increasing, as domestic food production reduces due to ill-advised policy decisions, which are now being reversed rightfully, following a social upheaval.
Most of the economic difficulties Sri Lanka faces today is a result of structural weakness in the economy, and adoption of ill-advised macroeconomic policies. Thus, drastic economic reforms and international financial assistance is required for the recovery of the economy from its current status.
2. Continuation of GSP+ vital to maintain export momentum
By Economic Intelligence Unit, Ceylon Chamber of Commerce
EU is Sri Lanka’s largest export market, where Sri Lanka had been benefiting from the lower tariffs under the GSP+ scheme offered by the region for many years. The European Parliament recently adopted a resolution requesting the European Commission to temporarily stop providing this benefit to Sri Lanka.
Such loss of the GSP+ privileges could significantly impact key export industries such as apparel, processed food products, seafood, toys and porcelain. It is evident from the situation these export sectors faced following a similar withdrawal in 2010, where competitors such as Vietnam, Cambodia and Pakistan were able to increase their exports to EU significantly while Sri Lanka’s exports loss its market share.
Thus, it is in the best interest of these sectors as well as the Sri Lankan economy as a whole that the key stakeholders negotiate with the European Commission in order to keep Sri Lanka from loosing its competitiveness in both the EU market and possibly the UK market.
(Compiled by: Promodhya Abeysekara, Malik Nazahim & Mariyan Perera)
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