Spotlight; Econ Op-eds in Summary (Week ended 18th March'20)
1. How bad might the coronavirus recession be in 2020
By: Ganeshan Wignaraja
· The global economy had been showing fragility even before the virus outbreak. Trade wars and geopolitical tensions had slowed down global trade while developing economies suffered from rising debt and fiscal problems. The unexpected spread of Covid-19 further disrupted global markets and supply chains, subduing business confidence and consumer activity, increasing risk of unemployment and poverty across the world.
· If the outbreak is contained within a few months, the global economy could recover by 2021. If not, a lengthy recessionary period is likely. Therefore, a coordinated global response, backed by national efforts, is critical. The current global response and fiscal measures introduced are still not on par with what we saw during the 2008 global financial crisis.
· For Sri Lanka, the virus is expected to impact the economy through reduced tourist arrivals, capital outflows, waning business confidence and falling exports. While the public health response to the outbreak is encouraging, a similar initiative in consultation with international agencies is needed to boost the economy and protect vulnerable households.
2. Sri Lanka’s economic recovery suffers amid COVID-19 threat
By: Shihar Aneez
· Last week, Sri Lanka started to gradually realize the grim reality facing the economic recovery this year due to the fears of the coronavirus’ impacts, both internationally and locally. One main impact is felt in remittances as Middle East closes down, and the oil prices drop resulting in many workers losing their jobs or having to shift to lower wage jobs.
· The tourism industry which had just been recovering from last year’s Easter Sunday attack would also be hit. Along with it, other related industries such as hotel, food and beverage, and transport sectors would be affected significantly. This is especially problematic since even the locals refrain from travelling, unlike after the Easter Sunday attack.
· China’s economic woes due to the virus also mean that we would have less imports of raw materials and intermediates. This means in order to maintain exports we would need to look for alternative sources which could result in delays and higher prices. The governments could also find it hard to refinance, given the grim economic conditions both locally and in major lending nations like China.
(Compiled by: Chayu Damsinghe, Promodhya Abeysekara & Asel Hettiarachchi)