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Monday June 3rd, 2024

Business Impact on Sri Lanka from COVID-19

The outbreak of the Novel Coronavirus (COVID-19) is having its toll on the global economy with many economists now expecting a larger impact than the SARS outbreak in 2002-03.

The outbreak is lowering China’s GDP growth expectations in the first quarter to 4.5%, a marked slowdown from the 6% recorded in the last quarter of 2019.

The slowdown in growth is also weighing in on global oil demand given China is the second largest oil consumer.

The International Energy Agency is forecasting a decline in the first quarter, making it the first quarterly fall in global oil demand in over a decade.

The implications for Sri Lanka are also important to understand given the trade and tourism exposure to the Chinese economy and the overall disruption to global supply chains.

In 2019, China emerged as the leading import partner for Sri Lanka accounting for 21% of total imports.

Chinese tourists were the 3rd highest source market for tourism arrivals in 2019. In this backdrop, the Ceylon Chamber of Commerce ran a poll amongst its member to understand the business impact so far from COVID-19.

49% of the firms that participated in the survey stated that their businesses had been impacted by COVID-19 (Refer Chart 1).

60% of the members expressed that their sales had not been impacted due to the outbreak in the last three weeks compared to the same period in 2019 (January 24th -February 14th period).

However, 40% of the survey responders stated that they had a sales decline (ranging between 0-20%, 20-40%, 40-60% and over 60%) due to the impact of COVID-19 in the same period (Refer Chart 2).

Chart 1

Chart 2

The disruption to supply chains and travel is the key concern that policymakers are trying to tackle.

In this regard, 43% of the survey respondents expressed that there was a slowdown in imports from China while 27% felt that there was no impact yet but are expecting supply disruptions in the next few weeks (Refer Chart 3).

65% of the members stated that their organization’s overseas travel for business purposes had been limited due to COVID-19 (Refer Chart 4).

In this regard, members expressed that there were cancellations of prospective meetings and events in the Asian region. The overall impact on inbound and outbound travel was a key concern amongst the survey respondents.

Chart 3

Chart 4

The impact from the delay in shipments of certain raw material imports from the region was a key insight from the survey.

Despite this, certain respondents stated that inventories were stocked up in preparation for the Chinese New Year which could mitigate the slowdown in shipment delays.

However, the impact for the months of March and April will need to be carefully monitored in terms of time delays and costs. Survey respondents were also concerned with regards to the business impact of misinformation related to COVID-19 developments.

Despite the uncertainty, there is also an opportunity for countries like Sri Lanka to benefit with trade and supply chain realignment.

In this regard, survey respondents highlighted the need for policymakers to provide that conducive environment for export growth.

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Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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