The exclusive index toys with a nation’s resilience and heads south once more

Some aspects of daily life have changed somewhat dramatically – most visibly, there’s more vehicular traffic on the streets and less items in a household’s shopping bag. But there is a determination to move forward with the provisions outlined in the interim budget and the IMF staff level agreement for a bailout in hand.

There’s also a realisation that Sri Lanka is not alone in its economic upheaval – but also that redemption must be homegrown.

THE INDEX The one of a kind LMD-NielsenIQ Business Confidence Index (BCI) has headed south again after titillating us with a dramatic rise in August of 32 basis points. In September, the index stands at 76, down five basis points from August’s 81.

Whilst this is no major reason for doomsday prophecies, this optimism must be expressed with caution.

Twelve months ago, the barometer stood at a respectable 104 basis points, and by and large climbed steadily until March this year. And as we settle down to the reality of higher prices for goods and services, it’s hoped that confidence will return to the corridors of business as well.

Perhaps it’ll be sometime yet before we can aspire reach the BCI’s all-time average of 125, but it is a goal well worth working towards.

Therica Miyanadeniya – NielsenIQ’s Director – Consumer Insights asserts: “As the country continues to struggle to bring down inflation and bolster its reserves, it is the people who are bearing the brunt of the economic collapse.”

SENSITIVITIES Rising fuel costs have hit almost every economy that doesn’t have access to sufficient national sources or adequate renewable energy options. Climate change is a reality of the present day.

Nations and leaders are scrambling everywhere, and Russia and Ukraine remain at war despite efforts to ameliorate relations. Many nations are not only having to choose between heating or air-conditioning homes and feeding families but are seriously challenged to revive economies that are still reeling from the effects of the prolonged COVID-19 pandemic.

As local fuel supplies appear to have improved, inflation and the shortage of foreign exchange will continue to plague the quality of life in the medium term at least. Small and medium-size businesses, and the man on the street, will struggle to survive, post-interim budget disposable incomes could be squeez­ed further, and providers of non-essential goods and services will be even more impacted.

PROJECTIONS Following the 2022 interim budget and with the IMF loan agreement expected to be sealed by the end of the year, there is no doubt that Sri Lankans will be required to tighten their belts even more – as will others around the world.

And there’s Budget 2023 ahead of us too!

The silver lining is provided by the five percent of executives polled who view the investment climate in the country as ‘good,’ not to mention the 10 percent who consider it to be ‘fair.’ This is a notable degree of optimism from a group of whom only two percent said it was ‘fair’ a month ago – and no one thought the investment climate was good.

There’s a glimmer of hope, it seems.