Business Sentiment – Index Free Falls to a 21 Year Low

July, 1, 2022

Sri Lanka is suddenly fighting a new war with the index rolling back to wartime

When 99 percent of business leaders fear for the investment climate and the national coffers are as empty as a starving person’s belly, and when the very bare necessities of life are not available and people are looking deprivation in the eye, we are reduced to the very least of ourselves.

How much longer can businesses and the people draw upon their resilience and generosity of spirit to employ and feed their compatriots? Very soon, most if not all of us will be holding out our hands for alms.

Salvation cannot come soon enough. But from where and in what form – and from whom? The world is in crisis and our tribulations are shared by too many.

THE INDEX The LMD-NielsenIQ Business Confidence Index (BCI) has certainly stepped on a banana peel. It has slipped 50 basis points to a dismal 49 – from 99 in May. The question is whether it will drop to or below the all-time low of 31 when parliament was prorogued in September 2001?

That was during the civil war, two months after the central bank bombing, which shook the nation in distress.

Some records should not be broken.

Even with the third wave of the pandemic raging in June last year, the barometer of biz confidence only shed two notches to 87. Discouragingly, the BCI is way below its all-time average of 125 and a bleak 57 points shy of its 12 month average of 106.

So the nation births a class of ‘new poor’ with commodities in scarce supply and debts unpaid.

NielsenIQ’s Director – Consumer Insights Therica Miyanadeniya remarks: “The days ahead are undoubtedly dark with no light at the end of the tunnel. With the global economy also not faring well, with high inflation in almost all the countries, the country desperately needs a miracle.”

SENSITIVITIES It feels as if the vultures are circling. And worse still, there is little or no evidence of good news to come on the economic front. The shadows cast in March appear to have fulfilled their promise and overcast the BCI’s prospects of improvement in the coming months.

As the world’s breadbasket Ukraine struggles to evade the yoke of warring Russia, and fuel and energy prices continue to rise, many global citizens face the prospect of hunger and famine – as perhaps do we.

Time to make the changes the young are clamouring for with the aragalaya. Time to turn things around… soon.

That the BCI is on a very slippery slope therefore, is not in doubt.

PROJECTIONS Eighty-eight percent of businesspeople are of the view that the economy will ‘get worse’ – and the long and short-term expectations of their sales volumes improving have declined sharply.

So it’s lose-lose time – and even at this eleventh hour, the only way forward is surely up? We must mind how we dispose of bananas for the sake of the wellbeing of the republic. We cannot afford any more slippage.

With the prospect of a new budget and even more belt tightening on the cards, not to mention the dire prospect of a lack of bridging finance to tide us over until the IMF bailout hopefully comes into effect, it would be careless to believe that business sentiment will recover any lost ground in the near term.



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