INDEX ENDS YEAR ON A LOW NOTE
Business sentiment continues its downward trajectory as the year draws to a close
Following a gruelling nine months for business in general and tourism in particular, the authorities finally announced that Sri Lanka would resume selected international flights beginning from 26 December with a blueprint also being drawn up to revive the hard hit tourism industry.
On the global front, updates on the rollout of COVID-19 vaccines in a number of countries offered some hope to those looking forward to a semblance of normalcy in the new year.
Nevertheless, scepticism seems to have reigned supreme as 2020 drew to a close with the results of the latest LMD-Nielsen Business Confidence Index (BCI) survey, which was conducted in the first seven days of December, reflecting a somewhat dismal state of affairs.
THE INDEX The BCI has recorded a further decline, falling by eight basis points from the previous month to 83 in December. This also represents the lowest point in the index for the entirety of 2020.
Nielsen’s Director – Consumer Insights Therica Miyanadeniya comments: “As the country continues to grapple with the COVID-19 crisis, and struggles to ensure that there’s continuity in business operations as well as the day-to-day lives of people, the hope of an end to the pandemic is beginning to look like a far-fetched dream.”
“The end of the year was very bleak with no hope of recovery and 2020 will go down in history as the year that never was,” she adds.
Miyanadeniya continues: “Reflecting this dismal situation, both the BCI and Consumer Confidence Index (CCI) continue to head south… Although both indices have not yet reached the levels post the Easter Sunday attacks in 2019, they are steadily approaching their all-time lows.”
SENSITIVITIES The most pressing issue for businesses in Sri Lanka today continues to be the impact of the coronavirus with high taxes, and bribery and corruption, being next in line.
Meanwhile, the spread of the virus is also the most pressing issue from a national perspective. Apprehension regarding the economy too appears to have grown. And there seems to be growing concerns over bribery and corruption in the national context.
PROJECTIONS As 2020 came to a close, businesses and the public were seemingly left counting the cost of the pandemic.
Miyanadeniya maintains that “everyone has had to adapt, be innovative and put in place measures hitherto unknown so as to survive. Some businesses were compelled to resort to drastic measures that have had a ripple effect on their employees…”
“The direction of the BCI and CCI will be dependent on what comes next – and if the situation continues to be the same vis-à-vis COVID-19, both indices are likely to move down further,” she cautions.
On the positive side of the ledger so to speak, a world that is swiftly moving towards immunising people at risk and then others offers a glimmer of hope; and as far as Sri Lanka is concerned, the timing of implementing a vaccination programme could well dictate whether the index moves up or down in the near term.