By Shiran Illanperuma
COLOMBO, March 13 (Xinhua) — The Sri Lankan economy may experience external shocks due to the COVID-19 outbreak, with tourism, garment manufacturing and tea exports to be hardest hit, a local expert said here Friday.
Atchuthan Srirangan, Assistant Manager – Research for Investments at investment management company First Capital Holdings, said that the Colombo Stock Exchange this week had dropped at a similar pace as foreign markets, partially fueled by fears caused by COVID-19.
“These external shocks are reflected in the Sri Lankan market. We have been seeing foreign sell-offs the whole year in companies related to tourism, garments and banks,” Srirangan said.
Sri Lanka’s tourism sector and garment exports would face challenges due to their reliance on western markets, and reduction of demand in Europe and North America, Srirangan said.
“Travel restrictions have put the tourism sector’s earnings on a downward trend, therefore the stock price of some major companies may see a drop,” Srirangan said.
“The bright side for the tourism sector is that the off-season begins this month, so the worse damage should be behind us,” he added.
Sri Lanka’s tea exports may also face challenges due to the reduction of global oil prices which may reduce the foreign currency earning of major Sri Lankan tea importers in the Middle East, Srirangan said.
On a positive note, Srirangan assessed that China is on track to make a full economic recovery, providing space for other countries to follow suit.
“Countries such as China and Singapore took swift action which may have had short-term economic impacts but allowed swift recovery,” Srirangan said.
“Sri Lanka’s decision to temporarily close schools and quarantine visitors coming from COVID-19 affected countries will hopefully have a positive effect,” he added.