The impact of COVID-19 on Sri Lankan economy

Abstract

COVID-19 is the communicable disease caused by the most recently discovered Corona virus. This new virus was unknown before the outbreak began in Wuhan, China, in December 2019(WHO, 2020). All the affected countries have been looking for a safety precaution while few countries are researching the specific vaccine against Corona virus but now the situations have gone out of hand due to lack of awareness and management. Sri Lanka has made great procedure in controlling the spread of COVID-19 more than six months into this pandemic; however the threat is not over yet. This research examines the economic impact of covid-19 on Sri Lankan economy and the specific objectives are to identify the outbreak on the key economic income earning sector such as tourism, food and agriculture, exports of apparels and textiles and small and medium scale enterprises and to find out the solutions and recommendation to reinvigorate the Sri Lankan economy. This research study is based on the secondary data such as published, export revenue report, WHO statements, annual report of CBSL and newspaper articles. Mainly, secondary data analyzing method was used to interpret the result. This study found that key income earning sectors such as agriculture, tourism, apparel and textile and small medium enterprises have been affected by this pandemic. The total export revenue of tea was USD 347.3 mn in 2019 and it was reduced by 270.1 USD mn in January to March in 2020. Earnings from some of other agricultural sectors such as fruits and vegetable products (15.9 USD mn), coconut production (136. 9 USD mn) have significantly decreased in March 2020 compared to March 2019. In 2019 from January to June, earning from tourism was 1,901USD whereas it was the least amount of 956 (from January to June) in 2020. This was due to the restriction imposed in the airport ways and cancellation of visas. The sales of more than 80% of the small medium enterprises declined due to delayed or cancelled orders by domestic and foreign buyers. COVID-19 pandemic has created many negative effects on key income earning sectors. Increase in the demand for alternative tourism including eco-tourism, giving low-interest working capital loans to small-scale retailers, wholesalers and small medium enterprises will shift a portion of their business in online and also the District Chamber of Commerce should initiate a courier service as another form of home delivery. These recommendations should be implemented to rebuild the economy.