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Spotlight: Econ Op-eds in Summary (Week ended 26th May '21)



1. Possible economic implication of a lockdown

By: Charith Isuru

  • A lockdown similar to that of the first wave had recently met resistance considering its economic impacts. However, the collapse of the economy will not be due to a lockdown, but rather from other factors including difficulties in servicing foreign debt. In fact, implementing a lockdown will enable essential services to operate in a controlled environment with economic activity bouncing back once it is lifted.

  • The reduced demand through lockdown can benefit certain macroeconomic indicators, with demand for imports dropping and the LKR stabilizing, as was witnessed in the latter half of 2020. However, this benefit will be short-lived once lockdowns are lifted, with imports recording strong growth as seen in early 2021. On the flipside, a lockdown can result in negative economic growth, reduced government revenue and adverse impacts on daily wage earners.

  • Printing money can help the government stimulate economic activity, as inflation pressures will only take effect in the long term. If import controls are in place, money printing will not pressurize the exchange rate as well. A 30-day nationwide lockdown will help the economy break out of the 3rd COVID-19 wave and will result in greater economic benefits to the country in the long run.

For the full article – Refer Daily FT

2. Containing COVID crucial for economic survival

By Nimal Sanderatne

  • The containment of Covid-19 should now be considered a national priority. As such a three-pronged strategy of preventive measures, social behaviour and vaccination of a large number of citizens is key to containing the pandemic and should be implemented at the earliest.

  • This year export targets may be affected adversely by dislocation of production as it is challenging to maintain production amidst travel restrictions and lockdowns. However, resilience, adaptability, and diversification of exports into new markets have helped and would continue to help the country to keep the negative effects at minimal.

  • While the industrial and the services sectors are affected by restrictions, agriculture had been a sector which has shown resilience locally as well as globally. In such a situation the ban of chemical fertilizer might negatively affect the agricultural production of the country. As such appropriate economic policies are vital to increase production of both agriculture and industrial sectors in the country.

For the full article – Refer The Sunday Times

(Compiled by: Promodhya Abeysekara, Malitha Goonerathne & Mariyan Perera)

Disclaimer: This information has been compiled from sources believed to be reliable but Frontier Research Private Limited does not warrant its completeness or accuracy. The bullet points provided for each summarised opinion article is written by Frontier Research and has no connection to the respective author. Furthermore, the information contained in these reports/emails are confidential and should not be shared publicly. Disclosure, copying and distribution is strictly prohibited.

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