March, 26, 2020
Financial markets have tanked, the global economy faces the prospect of a recession and across the world, ordinary citizens are being forced to grapple with lockdowns and social distancing on a scale hitherto unwitnessed in recent history.
The culprit happens to be an invisible but deadly virus known as COVID-19, which has spread its proverbial wings across virtually the entire world.
Sri Lanka too entered a phase of self-quarantine and social distancing that may seem alien to some but is considered vital to save the lives of the most vulnerable: the elderly, immunocompromised individuals and people with comorbidities, as well as those on the frontlines – primarily, the nation’s healthcare workforce and security personnel.
It is a given that Sri Lanka will not be spared the global market turmoil. An indicator of market sentiment, the Colombo bourse temporarily halted trading a few weeks ago following the S&P Index plunging by more than five percent, reflecting uncertainty surrounding the coronavirus outbreak from a corporate standpoint.
While all these dramatic turns of events may not have been at the forefront in the first week of March – i.e. when the latest LMD-Nielsen Business Confidence Index (BCI) survey was conducted – they’re no doubt factored into the results, which paint a less than flattering picture about the business landscape.
THE INDEX The BCI declined to 145 in March from 153 in the previous month, which represents a sustained retreat in the index. Nevertheless, it continues to hover above the barometer’s 12 month and all-time averages of 112 and 127 respectively.
Nielsen’s Director – Consumer Insights Therica Miyanadeniya comments: “It appears that the honeymoon phase is over and with the coronavirus gripping the nation with fear, the BCI continues to fall.”
She elaborates that “although the general election is forthcoming, both consumers and businesses are more concerned about the COVID-19 pandemic, which has made inroads in Sri Lanka as well.”
SENSITIVITIES Inflation and interest rates are major concerns among businesspeople in addition to high taxes. Meanwhile, the coronavirus also enters the list of pressing issues for business in Sri Lanka today.
This is particularly true of supply chains with a member of the corporate community noting that they “face difficulties in importing products from China due to the coronavirus. Therefore, the future of business is uncertain.”
PROJECTIONS Prevailing sentiment indicates that the impact of COVID-19 will hit businesses and the economy hard – similar to what transpired following the Easter Sunday attacks last year, according to Miyanadeniya.
She adds: “The global impact of the coronavirus pandemic coupled with the forthcoming general election has created some level of uncertainty. So it is quite likely that both the BCI and CCI will continue to drop.”
While the hope is that the outbreak will be contained to manageable levels through state, individual and organisational measures, the business outlook hangs in the balance as the authorities work to combat a disease that has tested the very essence of human resilience.
- LMD -