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Wednesday March 29th, 2023

Sri Lanka unemployment hits 10-year high in 2020 March quarter

ECONOMYNEXT – Sri Lanka’s unemployment hit 5.7 percent in the March 2020 quarter, levels not seen since 2009 at the end of a 30-year war, in 2009 when the unemployment rate spiked over 6 percent, data from the state statistic office showed.

Sri Lanka’s tourism sector took a hit with Coronavirus from the first quarter of 2020, but the airport was closed in March 19 and curfews started shortly after.

Sri Lanka’s economic output is expected to contract absolutely in the second quarter, for which data is not yet out.

Sri Lanka’s unemployment hit 6 percent levels at the end of a 30-year war and came down rapidly.

The data is based on statistical surveys which have error margins. Pre-war data may also not be directly comparable as the statistics office was not active in the North and the East earlier.

After the war, there was a construction boom, partly financed by China, which injected demand into the economy.

However, greater monetary instability hit the country from around 2012, with balance payments crises coming in quick succession amid worsening proc-cyclical money printing from the central bank, which ended the relative monetary stability seen in the country from 2000 to 2011.

Sri Lanka’s unemployment rate has been edging up from around mid 4 percent levels over the past three years amid greater monetary instability, price controls, rapid policy and tax fluctuations which made for an uncertain business environment (regime uncertainty).

Sri Lanka’s Import and Export Control Department, which was a key driver of the 1970s economy, a midnight gazette and the Consumer Affairs Authority are key sources of regime uncertainty.

The last administration also set up a new price control authority, the National Medicinal Drugs Authority, instead of reforming the central bank. The NMRA now gives periodic controlled price hikes when the central bank prints money or depreciates the currency for de facto or explicit REER targeting, analysts have said.


Sri Lanka squandered chance to reform and grow: Razeen Sally

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Sri Lanka caught in ‘fatal conceit’ of swinging away from markets

Sri Lanka resorting to ‘supreme idiocy’ of price controls: Razeen Sally

Sri Lanka battered by unceasing ‘regime uncertainty: Bellwether

In 2011, Sri Lanka expropriated private firms including Board of Investment approved companies through an ad hominem law and in 2015 a ‘super gains’ and several expropriation taxes were slammed further worsening property rights, policy stability and just rule of law.

The policy has also deteriorated with trade restrictions which worsen whenever the central bank prints money and triggers currency trouble.

Large numbers of Sri Lankans went to work abroad, including under difficult conditions in the Middle East from the 1980s as the rupee collapsed, helping reduce domestic unemployment numbers which hit close to 20 percent during the period of trade restriction in the 1970s.

2020 also started with more regime uncertainty with tax reversals and a debt moratorium just as the economy was starting to recover from a 2018 balance of payments crisis.

Meanwhile, the statistics office said the total employed population fell to 8.02 million in the first quarter of 2020, down from 8.12 million a year earlier.

Agriculture workers had grown from 2.01 million to 2.12 million, while those in the industry fell from 2.31 million to 2.17 million.

Service sector workers fell from 3.85 million to 3.71 million.
Among the unemployed, female unemployment was sharply higher at 9.6 percent, compared to males at 3.7 percent.

Unemployment below GCE A/L qualified persons was 2.7 percent for males and 5.4 percent for females.

Among those with GCE A/L and above unemployment was 10.1 percent, with 5.5 percent among males and 14.7 percent among females.

“Survey results further show that the problem of unemployment is more acute in the case of educated females than educated males, which was observed consistently over the results of previous survey rounds as well,” the statistics office said. (Colombo/July20/2020 – Update II-sb)


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Sri Lanka stocks recover with banking and finance sectors leading the way

Stock Market. Free public domain CC0 image.

ECONOMYNEXT – Sri Lanka’s stocks edged up on Wednesday recovering from the two-day loss, with banking and finance sectors pushing up the market as buying interest returned for the day, easing selling pressure, brokers said.

The main All Share Price Index (ASPI) closed up 0.42 percent or 39.03 points to 9,272.43.

The market was on a downward trend since last week as investors are adopting a wait-and-see approach until more clarity is given regarding local debt restructuring after the International Monetary Fund approved the extended loan facility.

“Buying interest has renewed and selling pressures are wearing off,” Ranjan Ranatunga of First Capital Holdings said.

Shares at Lanka IOC was gaining during the following week on the news that the Sri Lanka cabinet has granted approval for three oil companies from China, the United States, and Australia in collaboration with Shell Pl to lease 150 fuel stations for each company to operate in the local market.

However, sudden price revision of fuel by the Energy Ministry has hit the shares dragging it down, analysts said.

A crossing was seen by Horana Plantations, with a 51 percent stake change coming into play, the crossing had generated 700 million rupees from the total turnover, Ranatunga said.

The market saw a net foreign inflow of 32.8 million rupees, and the total offshore inflows recorded so far in 2023 are 3.3 billion rupees.

The most liquid index, S&P SL20, closed 0.64 percent or 16.95 points up at 2,673.25.

The market saw a turnover of 1.4 billion on Wednesday, below this year’s daily average of 1.8 billion rupees.

Top gainers were Sampath Bank, Vallibel One and DFCC Bank.(Colombo/March29/2023)

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Rupee closes weaker at 328.50/329.50 against the US dollar, Bond yields steady

ECONOMYNEXT – Sri Lanka’s treasury bond yields were down and the rupee closed weaker in the spot market on Wednesday following an undersubscribed treasury bill auction, dealers said.

A 01.07.2025 bond closed at 31.25/30 percent on Tuesday, steady from 31.20/60 percent on Tuesday.

A 15.09.2027 bond closed at 28.25/29.00 percent, unchanged from Tuesday.

A one-year bill closed at 24.00/30 percent, down from 24.25/25.00 percent.

Sri Lanka rupee closed at 328.50/329.50 rupees against the US dollar weakened, from 325/328 rupees from a day earlier. (Colombo/ March29/2023)

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Sri Lanka tuk tuk, bus fares to be cut on lower fuel prices

CROWDED: An overloaded bus in a suburb of Colombo, leaning sideways with passengers clinging to foot boards.

ECONOMYNEXT – Sri Lanka’s bus fares will be cut from 12.9 percent from midnight onwards, a public transport regulator said while tuk tuk drivers said they are cutting their free market fares with immediate effect.

“The minimum rate will be cut to 30 rupees from tonight,” Lasantha Alagiyawana acting Transport Minister told reporters Wednesday. 

The minimum bus fare was previously 35 rupees. 

Three wheeler association President, Lalith Dharamsena said the first kilometer is charged from 100 rupees and 80 rupees for the second kilometer.

The price of Petrol 92 Octane will be slashed by 15 percent or 60 rupees to 340, Petrol 95 Octane 95 will be reduced by 26.5 percent or 135 rupees to 375, Auto Diesel by 19.8 percent or 80 rupees to 325, and kerosene by 3.3 percent or 10 rupees to 295.

Wijesekera said on President Ranil Wickremesinghe’s advice and in line with the price formula agreed with the International Monetary Fund (IMF), the prices will be reduced from midnight today. (Colombo/Mar29/2023) 

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