There is no certainty as to what the talks between Iran and the United States will achieve. Nevertheless, the Strait of Hormuz was opened for oil tankers. This has led to a fall in oil prices to below US$80 per barrel. How long this arrangement would continue is uncertain. Furthermore, the free flow of shipping [...]
While the country has been placed under lockdown, making newspaper distribution impossible, the Sunday Times team produced your favourite Sunday newspaper in digital format to bring you the latest news, feature stories and political commentaries. We are happy to announce that we are giving you free access to our digital paper. Click here to access the free epaper . If you like to be a subscriber to our regular epaper please click here .
There is no certainty as to what the talks between Iran and the United States will achieve. Nevertheless, the Strait of Hormuz was opened for oil tankers. This has led to a fall in oil prices to below US$80 per barrel.
How long this arrangement would continue is uncertain. Furthermore, the free flow of shipping may take some time owing to the congestion in the strait, the clearing of mines and other issues.
With both Houses of the US Congress voting against the continuation of US involvement in Iran, the Strait of Hormuz is likely to remain open for traffic in due course. The free flow of shipping through the Strait of Hormuz will reduce international prices of fuel, fertiliser and food items. It will also enable a free flow of our merchandise exports.
The latest development ensures peace, with the US withdrawing from the war with Iran. At the time of writing there is no indication of what would happen to the discussion in the Swiss Alps. Will a deal that ensures a durable peace be on the horizon?
Most commentators are of the view that the current talks at Burgenstock in Switzerland may result in an agreement that ensures peace and the free flow of shipping in the Strait of Hormuz and through other ports in the region.
For the present, Sri Lanka can breathe a sigh of relief that the prices of fuel, fertiliser and food will ease and our exports could reach their markets in the West and West Asia. The expanding trade deficit and the erosion of foreign reserves could be contained.
In spite of shipping difficulties, our exports increased in the first five months of the year. Merchandise exports increased by about 18 per cent to US$9 billion in the first five months. Export of services, too, increased during this period. The increase in ICT services was a noteworthy feature.
While we could feel a sense of relief that prices of fuel, fertiliser and food are likely to stabilise and our exports could be transported, there are fresh threats to the economy.
The imposition of an additional tariff of 15 per cent on our exports to the US, the review of the EU concessions on our exports to European Union countries, a dengue epidemic already recording more than 47,000 cases and the threat of an El Niño drought later this year are major concerns.
Nevertheless, the country is facing several other threats to our trade-dependent economy. It has to face an additional import duty of 15 per cent on imports to the US, as we are supposedly trading with countries using forced labour. The government is trying to find out what these countries are! Has the US classified some of our important trading countries in this category?
Furthermore, the European Union is conducting a review to determine whether the government has repealed legislation that violates human rights. The withdrawal of the trading concessions by the European Union countries will be a big blow to our exports and cause severe unemployment. Hopefully this will not happen.
Currently the country is facing a dengue epidemic. Around 47,000 persons have already been affected by it. Treatment is beyond the capacity of the country’s medical services, and there is a great deal of suffering. The government is taking preventive measures while treating the affected even in state hospitals lacking facilities.
The prospect of an El Niño drought later this year is indeed bad news. It could cause severe hardships to the livelihoods of many people, especially those dependent on the country’s agriculture sector. We can only hope that the prediction of El Niño does not occur or the North East monsoon will mitigate its impact.
The US is imposing additional tariffs on our exports at a time when our export earnings from the US are falling and import costs are rising and El Niño is expected to cause havoc to our agriculture and health sectors. Already there is an epidemic of dengue that is beyond the capacity of the country to cope with.
The country achieved an economic growth of 5.1 per cent in the first half of this year. This, together with inflation at 5 per cent, was an achievement. Poverty, however, increased to 29 per cent of the population in the first half of the year and could increase further during the second half. With rising costs of living, the period ahead could be a period of discontent. The expected El Niño could cause further hardships with a severe setback to agriculture and threats to food security. Opposition parties are sensing an opportunity to regain support and will no doubt pour oil in the fire.
The economic stabilisation and growth achieved in the one and a half years of the government is expected to be weakened. The economy is projected to grow by only 3 per cent, inflation may escalate and poverty is rising. The increase in merchandise exports and earnings from services and lower import prices could improve the trade balance and balance of payments, especially if tourism picks up. In spite of the lower economic growth, higher inflation and an increase in poverty, there is a prospect of enhancing our foreign reserves.
Buying or selling electronics has never been easier with the help of Hitad.lk! We, at Hitad.lk, hear your needs and endeavour to provide you with the perfect listings of electronics; because we have listings for nearly anything! Search for your favourite electronic items for sale on Hitad.lk today!
Your email address will not be published. Required fields are marked. Comments should be within 80 words. *
Post Comment Other Columns Disappointed farmers plan massive Colombo demo Sensational arrests highlight nexus between politicians and criminals You of all people will know justice must not only appear to be done, it must be done as well Battle against drug menace goes to Parliament; President vows to end it all Presidential (double) speak on a ‘civilised’ state; the NPP has a case to answer UK’s six Prime Ministers in ten years: Lessons for Sri Lanka on political accountability Amazing grace! How British power transited with style and with finesse Salvaging the nation to the Penta-Gonas Search The Sunday Times Home Archive Feeds Contact Us RSS ↑ Print Edition – The Sunday Times, Sri Lanka Print Edition – The Sunday Times, Sri Lanka
Loading comments…