Global Economic Crisis in Sri Lanka

In the initial decade of the 21^st century, the world has come to grip with the frightening scene of an economic crisis which - according to some - has no known precedent in history. The collapse of the banking system on which the countries depend for their economic activity has resulted in a multiplicity of problems, such as causing joblessness, bringing development to a standstill, shutting down of industrial and business organisations, and lowering the living standards of populations and the downward spiral of global trade.

The first sign of the global economic crisis became visible in the U.S. housing market sector in 2008. Since then it has been spreading to almost every country in the world – developed as well as developing. At first, we were hopeful that we would not be affected by the ill-effects of the depression, but now there are signs indicating that we too would be caught up in the vortex.

Ours is an export-import oriented economy. We export tea, rubber, coconut, spices, ready-made garments and jewellery etc. to earn the necessary foreign exchange to pay for the country’s import needs. The countries which buy these things from us have been badly affected and demand for them is ever on the decrease. There are warnings that the plantation sector has begun to feel the clutches of the crisis. Several local industries have already laid off their work staff as a result of having no demand for their produce in the international market.

The nationals who have migrated for employment abroad is another principal sector sending valuable foreign currency to their motherland, which is much needed for her economic development activity. They too have faced the threat of losing their employment in view of the looming economic crisis in the respective countries where they work. As a result of this situation, Sri Lanka’s economy too has become exposed to the worsening global disaster.

Set against this background where we are subject to the evil consequences of the global economic crisis, we have to evolve our own strategies to tide over this period of stress. There are numerous examples in history that demonstrate that, if you have the necessary confidence and courage, it is possible to overcome any obstruction. If Japan and Germany, which were reduced to debris by the Second World War, could rise, in a short time, as giant economic powers, we can reduce the impact of the crisis provided the government adopts proper fiscal measures and the nation is geared with determination to overcome the hurdle.

Similarly, business establishments in the private sector should not decide at once to wind up just because the demand for their products, in the international market, has decreased. In the unfolding scenario it is inevitable there is the need to reduce staff. Yet they should not think of a complete shut down. Instead, ways and means should be found to reduce overhead charges and day to day running expenses by evolving other strategies so that when conditions are improved they will be able to restart their enterprises. Alternatively they should change over to produce goods marketable locally.

In this connection, it has to be pointed out that the potential of the internet is of immense help to shore up the wobbling ventures. The modern trend is that most of the work done in offices is outsourced. There are several advantages in this method of getting work done. There is no necessity to maintain big offices and spend money on infrastructure. Work could be got done several times cheaper engaging those who work from home. Strikes do not disrupt the continuous flow of work and the management is not called upon to pay EPF, ETF and other fringe benefits in case of outsourcing. In this setup, offices are required to maintain only a minimum skeleton staff.  Why don’t our local entrepreneurs think about this positively in order to tide over the stress instead of shutting down their ventures for good?

Time has come for us to think of our priorities. What is our first priority? It is to live as a nation. Then, it is inevitable to draw a dividing line between what is essential and inessential. Saving every cent of foreign exchange is a must in this critical period to harness it for imports essential for national survival. Take a look around you, and you will see what and what inessential items of goods have flooded the market. For example, even small boys and girls attending school are armed with mobile phones. Are these things essential for their education? Open market policy needs reconsideration at this juncture if we are to save foreign exchange to survive this calamity.

Example should flow from our leadership who, it is a pity, only preaches but rarely practises what they want other people to do. First, they should tighten their belts and then ask the common man and woman to follow suit. If they abandon their joy rides abroad what a colossal amount of foreign exchange the country can save at this time of scarcity!

This crisis has driven us to make a timely evaluation between nationalism versus internationalism. Some people exhort that there is no place for nationalism in these days when the world has shrunk to a global village due to the fast developing information technology. There is no intention to challenge this assertion. What is meant here is that we should not allow internationalism to subjugate our national identity and make us unnecessarily dependent on the international community. In other words it means that we should endeavour to be self-sufficient wherever we can.

If we act in this manner, the nation can tide over this calamity, and the whole country will be with the government if it is convinced that the motives of the leadership are directed towards the general well-being of the masses.