Covid, International Business & Sri Lanka

By Krishmal Fernando –JULY 23, 2021

Krishmal Fernando

Ancient history articulates self-sufficient economies or autarkies. But in the world we live now, ‘International Business’ has become an essential part of the day to day lives. Cross-border transactions of goods, services, technology, capital, and knowledge now have become essential for an economy to function smoothly and advance further. This ultimately results in substantial interdependencies among economies. This being more notable when economies comprise more international businesses. Thus even a minor incident in one economy can quickly convert to a global crisis.

During the past two decades, Sri Lanka’s uncompetitive trade position had continuously resulted in negative trade balances. Sri Lankan economy was negatively affected as its two main export destinations, the European Union and the USA had a severe outbreak of COVID-19 during the first wave. Swift measures enacted by the SL government helped the nation to control the first wave of COVID-19. However, these measures had a particularly negative effect on tourism, manufacturing, and transportation, while collapsing global demand had a negative impact on the textile industry. World Bank reported a 3.6 percent contraction in the Sri Lankan economy in 2020. According to CBSL, Sri Lanka recorded a trade deficit of 840.30 USD Million in April of 2020 which is closer to the highest trade deficit record low of -1100.70 USD Million in November of 2011. During the past few months, Sri Lanka was able to successfully narrow down the record-breaking trade deficits due to a larger decline in imports compared to the decline in exports. On a cumulative basis, the trade deficit of US$ 7.997 billion in 2019 had decreased to US$ 5.978 billion in 2020.

After the ‘Third Wave’ and the outbreak of Delta variant, will there be a ‘Fourth Wave’?, How long can Sri Lanka maintain the current import barriers? What are the strategies of Sri Lanka to face pressure from global trade? How effectively can Sri Lanka boost its exports and tourism? Most importantly, how can Sri Lankan healthcare professionals maintain their renowned control over the COVID-19 spread? As a nation, these are few challenges we should overcome strategically.

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