Never before has Sri Lanka seen such a downturn of economic activities during the last few decades. I do remember, as a school kid in 1983, a university student during late 1990s, then as an employee until 2009, our nation went through economic, security as well as social issues and we were resilient to overcome such.
However, COVID-19 is yet to settle down. The world is reacquainting itself with the new environment, new norms and new ways of socialising, educating and conducting business.
We have witnessed that just after the first wave of the pandemic, most of the countries lifted the restrictions considering the economic losses of having the economies closed. In the absence of proper systems in place, most countries now face a second wave.
Economies are getting closed again except for a handful of nations who were able to manage the contraction of the deadly virus. Leaders of every nation are concerned about their economies, unemployment and low, nil or negative GDP growth. The question is how did the Sri Lankan economy manage the pandemic and get on with the economy introducing new norms?
As the country has a large number of employees engaged in the garment manufacturing industry, it is one of the main merchandise exports of the country.
Let’s look at this seriously and get the industry to implement a system of high standard of health and safety measures such as separating sewing machines with transparent thin partitions or shields safeguarding staff members, compulsory face masks, temperature checks at the entrance and perhaps during the break and finish of work, roster for lunch and tea breaks maintaining social distance and sanitisation of factories on a regular basis would be a new norm to stay safe and to open the factories.
Another area can be the retail outlets such as cafes and restaurants. Transparent counter-shields and partitions among dining tables would make a difference in the continuation of their business having high standard of health, safety and hygienic measures in place. These measures are nothing new and many countries have already adopted this in opening up of their economies. Online orders and takeaway are more common.
Further, the Government also can reduce the currency circulation in the country, making small traders accept card payments which can be a mechanism to track income and expenditure of certain sectors as well as the banking sector would be in a better position to ensure that customers would not withdraw large sums of cash as there is no reason to do so.
I believe the Government should step in and provide facilities to small business owners to be equipped with the necessary facilities to do so.
The other service industries of course have implemented work from home to a certain extent. The service industry can adopt such a norm permanently which may even reduce corporate overheads while providing flexible working arrangements from home on a roster basis. Especially in Colombo, a large number of employees comes to the office either through their own transport or public transport.
If the flexible work arrangements are in place it also may reduce the traffic in and out of the city. The public transport operators may not be able to maintain profitability if only few passengers are on board maintaining social distance. In a situation like this it is the responsibility of the Government to have the transport operators afloat by way of stimulating the industry with subsidies.
Another main industry that has been affected with international tourism is the hotels and tour operators including small-scale self-employed sector. The industry has suffered since the pandemic began early 2020.
Here again the hotel industry should be provided with a stimulus package by the Government in order to pay their employees, maintenance and meet necessary expenses to a certain extent. At the same time a mechanism should be in place to provide tour operators and small-scale self-employed sector to meet their needs in this needy hour.
The current Government has full powers to implement such economic policies and get the ‘COVID-19 Comeback Economy’ with new norms.
Overall, Sri Lankan economy forecast for annual GDP is a negative growth due to global pandemic and the recovery would be slow. Government debts and the budget deficit increased. It is evident that the Keynesian economic theory in its simplest form, argues that decisions in the private sector sometimes lead to inefficient macroeconomic outcomes, which requires active Government policy responses, particularly monetary policy actions by the Central Bank and fiscal policy actions by the Government to stabilise output over the business cycle.
(The writer is an Economic Strategist.)