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Asia Securities, a leading investment firm, is forecasting coronavirus to trigger tourist arrivals to drop by 100,000 as well as disruption to supplies impacting several other sectors.
In a special note, Asia Securities said the first-order impact of the Coronavirus is clearly on tourism.
“In Sri Lanka, the tourism sector is expected to take a hit to its arrivals numbers during the peak January-March period. Asia Securities Research expects a 100,000 drop in arrivals compared its original 2020 estimate,” the note added.
Chinese tourists account for 8% in the arrivals mix, and this number is expected to drop sharply during the peak season, it said adding consumer sector to see second-order impact from soft tourism.
Asia Securities also said further delays in restarting operations in China could impact several sectors in Sri Lanka and slowing global trade and dropping freight rates may bring down the logistics sector.
Sri Lanka also depends on China for aluminium, fertiliser, fabrics, iron, and steel so production delays in China are likely to impact the local agriculture, construction, and apparel sectors. As of end 2018, China was Sri Lanka’s second-largest import destination, behind India, accounting for 18.5% of total imports. In terms of exports, the Chinese market accounted for 2.0% of market share in 2018.
“The concern here is if delayed production could impact manufacturing as China exports raw materials for industrial production globally. A prolonged loss of output from China could lead to raw material shortages. However, on a positive note, we expect the recent drop in global oil prices to help lessen the burden on the trade balance during the first quarter of 2020,” Asia Securities noted.
