The Impact of COVID-19 on the Sri Lankan Economy

Abstract

The most recently identified Corona virus causes COVID-19, a communicable illness. Before the outbreak in Wuhan, China, in December 2019, no one had heard of this new virus (WHO, 2020). All of the afflicted nations have been seeking for a safety precaution, and a few countries have already specialized a Corona virus vaccination, but the issue has already spiralled out of control owing to a lack of knowledge and management. More than six months into the epidemic, Sri Lanka has made significant progress in limiting the spread of COVID-19; nonetheless, the threat remains after hitting the third COVID-19 wave. This paper determines on identifying the impact that has created within the Sri Lankan economy specifically pertaining to the key income sectors of the country, such as tourism, apparel and textile industry, small and medium enterprises, agriculture and food. Tea export income dropped to USD 270.1 million in January to March 2020. In March 2020, earnings from other agricultural sectors such as fruits and vegetable products and coconut production were substantially lower than in March 2019. Tourism earnings from January to June in 2019 were 1,901 USD, whereas they were 956 USD in 2020 (from January to June). This was due to restrictions placed on airport routes and visa cancellations. Due to delayed or cancelled orders from domestic and international clients, sales of more than 80% of small and medium businesses decreased. COVID-19’s impact on all these key revenue generating sectors in the country however led to a negative GDP growth of 3.6% whereby it can be concluded that the overall impact upon the pandemic on the country’s economy has left a negative impression and appropriate recommendations should be implemented to achieve an economic growth despite the ongoing pandemic of the country.