Sri Lanka drought seen hitting consumer goods, finance firms
ECONOMYNEXT – Severe drought in Sri Lanka that has curtailed production of rice and other crops and deprived almost a million people of drinking water will affect consumer goods and finance companies, according to a new report.
The drought, believed to be the worst in 40 years, will have a significant impact on first quarter economic growth and some impact on second quarter performance.
Household incomes in agriculture dependent areas would be affected, according to the ‘Initial Drought Rapid Assessment 2016/2017’ presented on the drought impact organised by the Asia Pacific Alliance for Disaster Management Sri Lanka (A-PAD Sri Lanka) Monday.
Lower household incomes in turn would adversely affect FMCG (fast moving consumer goods) sales, loan repayments, other food and beverages spending, as well as discretionary spending outside essentials, the report said.
Paddy cultivation in the main Maha season will be severely affected with a lower harvest in March/April 2017 expected.
By end-November only 281,910 hectares of paddy lands had been cultivated or 35% out of a usual 804, 830 hectares, possibly the lowest level of cultivation in the island in three decades, the report said.
The loss of two consecutive cultivation seasons – 2016/17 Maha and 2017 Yala – will impact household spending and consumption patterns would change.
The drought would “have impacts on finance and leasing companies as well as micro-finance entities owing to debt repayment difficulties,” the report said.
(COLOMBO, Feb 20, 2017)