Impact of COVID-19 on Sri Lanka Economy

11 Pages Posted: 26 Aug 2021

See all articles by I.G.E.A.W. Subhashanai Edirisinghe

I.G.E.A.W. Subhashanai Edirisinghe

Uva Wellassa University of Sri Lanka, Faculty of Business Management

Date Written: August 25, 2021

Abstract

The 2019 novel coronavirus disease (“COVID-19”) was first identified in December 2019 in Wuhan, the capital of Hubei Province in China. Since then the outbreak has significantly expanded across borders, leading the World Health Organisation (“WHO”) to declare COVID-19 a pandemic on 11 March 2020. As the number of cases increase globally, the epicentre for the disease has been shifting from Wuhan region in China to Europe and most lately, the United States of America. According to the information provided by WHO, the mortality rate of COVID-19 is likely to be significantly lower than for Severe Acute Respiratory Syndrome (“SARS”) or Middle East Respiratory Syndrome (“MERS”) but higher than for seasonal flu. Why is it so dangerous? Studies show that the average number of new infections generated by a single infectious person could be more than double that of SARS and five times that of the seasonal flu. As the outbreak continues to spread, governments across the world have resorted to varying levels of public health measures, including movement restrictions, nationwide curfews, travel bans and border closures to tackle the pandemic. These measures are having a huge impact on people’s lives, families and communities whilst having significant consequences on national economies and global trade.

The world countries are facing a crucial moment in their economies due to the COVID-19. We are able to observe that the COVID-19 which was considered a health issue at the outset, gradually developed into an economic crisis. Though nearly 99.7 million people are affected by this on a word wide scale, nearly 2.14 million people have lost their lives. When considering Sri Lankan experiences, 59,167 people have been infected the death rate has risen to 287 till 234 of January 2021. From the report of the “world Economic Outlook” published by the international monitory fund, we find that in October 2020. The world economy has dropped by 4.4%. When compared to 2019, the world's economic grown is 0.6% nearly 90 million people are facing a great challenge to reach the daily income level of $1.90. 44 Developed economics have recorded a 5.8% economic drop in 2020 though has targeted a 3.9% increase in 2021. On the other hand, developing countries have recorded a 3.3% economic drop in 2020 and aims at a 6% economic growth in 2021. In 2020, the world economy has experienced a slump situation. To overcome this slump economic crisis the word central banks’ governments have implemented many economic reforms. At the same time the central banks have been engaged in activities towards relaxing their Monitory policies. In this activity they are mostly following (non-traditional policies) unconventional policies. Central banks have reduced their interest rates. Governments with the particular view of reducing the stress faced by the affected businesses are helped by tax reforms. Though the COVID-19 has taken the world economy to an unstable position, yet the expectation of the COVID-19 vaccines have boosts up the morale of the economically affected countries.

Keywords: COVID-19, Economic Impacts, Sri Lanka, Export Earnings, Tourist Arrivals, Poverty

JEL Classification: E2, E5, E6, G2

Suggested Citation

Edirisinghe, I.G.E.A.W. Subhashani, Impact of COVID-19 on Sri Lanka Economy (August 25, 2021). Available at SSRN: https://ssrn.com/abstract=3911321 or http://dx.doi.org/10.2139/ssrn.3911321

I.G.E.A.W. Subhashani Edirisinghe (Contact Author)

Uva Wellassa University of Sri Lanka, Faculty of Business Management ( email )

Sri Lanka

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