Page 62 - UDYAMA FINAL final for web

Strategy Report 2021

The second leg of

‘W’; bumpy road to

‘Recovery’

Sri Lanka’s economic growth has Following the gradual opening up POLITICAL & POLICY STABILITY
been slowing down over the last of the economy after the release REMAINS HEALTHY: LOW RISK
5-6 years, as the country closes in of the 1st lockdown in Sri Lanka,
on the upper middle-income band. the economy registered a steep Stability ensued with 2/3 majori-
The country has many structural recovery in specific sectors ty:
issues which require massive especially led by manufacturing, In line with the historical trend,
painful reforms in order to achieve food and beverage and General Elections results foll-
accelerated growth. So far no construction sectors. owed the Presidential Elections
political party has had the will to providing an overwhelming
guide Sri Lanka through the Considering the heavy CBSL majority to the ruling party. With
reforms, as Government after Holding volume and inevitable the government maintaining its
Government considers and imple- relaxation of import restrictions, 2/3 majority, for investors, it
ments temporary measures economy may showcase a curren- provides confidence in relation to
kicking the can down the road. In cy spike followed by an interest policy stability which is a priority
the present state, ignoring the rate spike resulting in another for long term investments.
fundamental problems is increas- shock to the economy which may
ing becoming a daunting task. prevent a V shaped recovery Provincial Elections may follow
while inducing a W-shape for the in 2021:
recovery process. We expect Provincial Council
Covid-19 & Sri Lanka’s Elections to be held possibly
W-shaped recovery towards 2H 2021. The PC
OUTLOOK FOR 2021 Elections are also likely to
The spread of the Covid-19 virus provide a similar trend to the
across the world has had a major In understanding the outlook for General Election potentially
blow to all economies across the 2021, lets first look at the factors providing a ‘majority’ for the
world, with Sri Lanka being no that needs to be considered for ruling party for most of the Coun-
exception. The economic down- 2021. For ease of structuring the cils. In such a situation it is likely
turn driven by the virus was a factors have been divided into 3 to further strengthen the stability
significant setback for the already main segments, political, econom- on the political front favouring
fragile economy. ic, and external. long term investments.

60 January 2021