The worker remittances to Sri Lanka rebounded during the first five months, while the earnings from tourism continued to grow, as the two current account flows gave some respite to the country’s worsening external account track record in recent months.
The worker remittances, which have been languishing during the recent past, mainly due to the tightened Gulf economies, picked up pace and during the first five months, such earnings increased by 3.3 percent year-on-year to US $ 3.1 billion.
In 2017, the worker remittances to Sri Lanka slowed to US $ 7.16 billion, from US $ 7.24 billion in 2016, as the Gulf states, which absorb the bulk of the Sri Lankan expatriate workers, faced economic headwinds, due to lower oil prices.
But with the global oil prices starting to gradually stabilize in the recent times, the Gulf economies appear to have built up some resilience.
Worker remittance is still the single largest dollar earnings source for the Sri Lankan economy, which has resisted economic diversification ever since it opened up its economy for the world in the late 1970s.
With the then United National Party (UNP) government liberalised the economy in 1977, with scant controls on what should be allowed into the country and what not, domestic production faltered, giant industries never emerged, except for the textile and garment industry and the people without jobs sought jobs as domestic aids, even under the deplorable conditions in the Arab countries.
Under the preaching of the advanced nations in the West, which provided ample protection to their infant industries when they were developing nations such as Sri Lanka and even now protect their crucial industries such as agriculture as developed nations, the present UNP-led administration has again adopted liberal market policies, instead of looking for a more balanced and sustainable approach to economic growth.
As a result, Sri Lanka is deepening its hole in the trade account, as cheaper imports race ahead of exports.
According to the latest external trade data available, during the first four months of this year, Sri Lanka’s trade deficit widened to US $ 4.0 billion, from US $ 3.3 billion during the same period last year.
Meanwhile, the tourism industry earned US $ 1.9 billion during the first five months, from a little over a million visitors. However, May’s earnings stayed below March and April earnings, at little under US $ 250 million for the month.
According to economists, the Sri Lankan economy needs diversification and foreign direct investment. But Sri Lanka’s present-day policymakers, who came into power in 2015 and often bragged they mended the relations with the West, have since been waiting for the investments from their former friends that never came.