Spotlight: Econ Op-eds in Summary (Week ended 04th September '19)
1. Economic policies must address external sector risks facing the Sri Lankan economy
By: Prof. Lalith Samarakoon
· Volatile trade performance has led to Sri Lanka’s trade balance widening in recent years. This was driven by weak growth in the export sector, which had been below par compared to other Asian economies and Upper middle-income countries. This creates a need for a revamping of the country’s export development strategy.
· Another factor affecting the external balance is the decline in the income account. Two out of the three main foreign income sources for Sri Lanka – Tourism and Workers’ remittances - have seen a slowdown. FDI inflows, although showing a rising trend, are still below the range needed to support growth. In light of such developments, strategies related to these areas too should be reconsidered.
· Even though increased capital flows into government securities and a narrow trade balance could mitigate any issues in the external balance, political and macroeconomic risks could worsen the external balance. This requires the country to plan to respond to any significant deterioration of the external sector in the short to medium term.
2. Genuine value
By: Daily FT
· Tourism earnings for the first half of 2019 haven’t been too bad considering the shock of Easter Sunday, earning US$ 1.8 bn compared to the US$ 2.1 bn for the same period in 2018. Social media has been an important driver of this. However, the value and treatment provided to tourists has been increasingly questioned in such channels in recent years.
· A problem that has plagued Sri Lankan tourism in the past is that of unequal treatment of foreign tourists with higher prices, and low quality of service provided at tourist destinations. These higher prices haven’t been met with any heightening of services to compensate tourists. In fact, tourist infrastructure such as bathrooms and canteens are notoriously underdeveloped.
· Such issues have been brought to light before, but corruption in the complicated system that oversees Sri Lankan tourism has resulted in very little being done to fix this. With tourists using more social media than ever, all this could end up creating a negative view of Sri Lanka as a tourist destination.
(Compiled by: Chayu Damsinghe & Promodhya Abeysekara)