Opinion
Surviving the World economic crisis
The outbreak of the Covid-19 pandemic precipitated a world economic crisis. Many commentators suggest that the pandemic caused the crisis. In actual fact, several economists, such as Sri Lanka-born Howard Nicholas, have predicted this economic downturn for several years.
The roots of the crisis go much deeper than the Coronavirus. The economies of the world are mired in debt. Because of the hegemony of the financial elite, companies in the advanced industrial nations have not, for years, invested in new plants and machinery but have, instead, used government subsidies to buy back their shares from shareholders. Investors have used this mechanism to increase the apparent value of their assets, enabling them to borrow more from banks.
This is because investors expect to make money, not from the dividends enabled by company profits, but by speculating in company shares. Many of the so-called “unicorn” companies (new, fast growing companies valued at over US$ 1 billion) make no profit, but grow because investors believe they will grow in value.
Economic stagnation
For the same reason, many big companies, such as Apple, Facebook and Google, instead of increasing their own value by investing in production, or research and development, buy other companies. Profitability is increased by reducing staff numbers, or hiring temporary staff at much lower remuneration, often on a “gig” (for-the-job employment) basis. This in turn has an effect on workers’ purchasing power, which affects the growth of markets negatively.
This kind of economic stagnation occurs from time to time. It used to be solved by more “inefficient” companies (that is, companies that do not make a profit, even if they happen to be more efficient by other criteria) going bankrupt, and more profitable companies expanding into the space they create. This has changed now. For example, the old hiring-car-based company Hertz, which made a profit of US$ 168 million in the last quarter of 2019, went bankrupt, while Uber, which made a loss of US$ 1.1 billion in the quarter, is doing famously. Companies able to attract capital prosper, while those seen as not expanding, fail.
The economy recovers from such crises by investing heavily in new technological methods to increase productivity. In the last two decades, however, companies in the West, especially in the USA, have invested in technologies that enable them to extract the greatest profit from “gig” labour, and essentially in sales, delivery and other services, rather than production.
On the other hand, East Asian countries have invested heavily in high-tech manufacturing industries. China, Japan and South Korea, together, account for two thirds of all new industrial robot installations, while Europe and North America only account for 30%. In the context of the current crisis, such countries will probably lead the recovery, with brand new technologies. Other up-and-coming industrial powers, notably Vietnam, Iran and India, will also accelerate their technological capabilities.
The continued economic stagnation, in the USA, has several corollaries. In the first place, as the world’s biggest consumer of imports, the exports of export-based economies will suffer. In the second place, investors are fleeing the US Dollar for gold, the price of which has risen from US$ 48,000 per kg in March to over US$ 65,000 per kg today. The consequent fall in the value of the US dollar (from € 0.94 in March to € 0.85 today) means that exporters will be even more disadvantaged.
The USA is also the world’s biggest consumer of petroleum – using more than the combined consumption of the next two countries, China and India. The price of crude petroleum in Dubai fell from US$ 64 in January to US$ 23 in April. Although the price rose again, to US$ 43 in July, the lower value of the US Dollar means that the real increase is less than this. This means the income of the Middle East and Russia will be affected severely.
Different approaches
How have other countries coped with the economic downturn? The USA, China and Germany represent three different approaches to the problem.
Apparent economic growth, in the USA, before the pandemic, was based on short-term, low wage jobs. Once Covid-19 hit, the country experienced its fastest unemployment growth in history. In reaction, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which budgeted US$ 2 trillion (10% of GDP) to boost the economy. More than half of this went to companies, while less than a quarter went as compensation to poor people losing their jobs or otherwise affected by the crisis.
This stimulus package helped cushion the collapse of the US economy. However, the payments made to the affected poor people often went to pay immediate food and rent needs. Most of the consumer spending due to payments to individuals went to online delivery companies, such as Amazon and Uber, which employ workers on “gig” terms. They did not spend it in shops and supermarkets which employ permanent staff, so unemployment rates remain high.
Unfortunately, even this funding ended at the beginning of August. The government and the opposition (which controls the legislature) argued about a new stimulus package. President Trump wanted to spend only US$ 1 trillion, reducing payments to unemployed people. The opposition Democratic Party wants to spend US$ 3 trillion, mostly on benefits to the affected people and on government programmes, including schools. The two sides could not agree.
“The Democratic Party continues to insist on radical left-wing policies that have nothing to do with the China [sic] virus,” Trump said. On 9 August he signed four “executive actions” regarding payment of reduced unemployment benefit, a moratorium on income tax for poor people, relaxing rules on evicting tenants and action on student loans. Critics say the executive actions may not be workable.
“Six guarantees”
China, the world’s biggest manufacturing nation, the first to suffer from the Covid-19 pandemic, has seen its economy recover. According to “The Economist” magazine’s Intelligence Unit in Beijing, local government investment, in public medical facilities, city infrastructure, old community renovations, transport, power grids and telecommunications, drove construction growth. This, in turn, stimulated production of construction-related machinery and goods, driving up manufacturing output.
The Chinese government has revealed a “six guarantees” recovery plan, based on creating jobs, giving financial support to ensure livelihoods, protecting small and medium enterprises, food and energy security, stability of the industrial supply chain, and facilitating the path from lockdown to a vital social life.
The Standard Chartered Bank says that China’s government is prioritising social goals ahead of GDP growth by creating employment and indicating that fiscal policy will be its preferred way to stimulate the economy. Officials have suggested that they are willing to almost double the budget deficit to support gross domestic product growth, while allowing money supply and credit growth to reach higher levels. There also appears to be a clear shift in China’s strategy; moving from an export focus to paying greater attention to domestic demand, to releasing consumers’ potential, and investing in new and traditional infrastructure projects. It projects a growth rate of 2-3% this year, a surprisingly high outcome for an economy which shrank rapidly in the first quarter of this year.
“Green” recovery
Meanwhile, Germany, the biggest European economy, has put in place a radical “green” recovery plan. The € 130 billion plan consists of fifty measures designed to boost consumption and speed-up economic recovery. The Government of Germany’s actions will be structured on this recovery plan. It is based on three pillars: € 78 billion on short-term economic recovery (about), about €5,000 billion on investment in future-proof and green technologies, and, € 3 billion on European and international solidarity (in addition to the efforts of the European Commission’s recovery plan).
Reducing VAT by 3 percentage points (12 percentage points for the catering and restaurant sector) – to stimulate consumption and revive employment in businesses, particularly in the hard-hit food and beverage sector – will cost the government € 20 billion.
The short-term recovery plan includes a huge green effort: subsidies on consumption of renewable energies, together with a carbon tax, will move use to electricity from other modes. In the transport sector, subsidies for buying electric vehicles are doubled, and support is given to battery and charging infrastructure, modernising commercial vehicles, ships and aircraft, and to public transport and railways. The construction sector has € 2 billion allocated for energy efficient retrofitting to existing buildings.
A key point in the plan is the new green hydrogen (produced by electrolysis from renewable electricity) sector, for which the government is allocating € 3 billion to develop 10 GW of electrolysis units by 2040. Together with the budget for European and international solidarity, this will put Germany firmly in the lead in this technological area.
Lanka’s markets
In the second quarter of this year, the USA’s gross domestic product declined by 35%, and the government recorded 23 million people as unemployed, the highest rate in 80 years. In the European Union the GDP declined by 7%, and unemployment increased to 14 million. In Britain, GDP has declined by 9%, driving unemployment up to 2.5 million. In Russia, GDP dropped 8%, and unemployment rose to 1.7 million. Middle Eastern economies will slow by 5%, affecting migrant labour employment.
These are Sri Lanka’s biggest markets. This shrinkage will adversely affect Sri Lanka’s economy. Both exports, and foreign labour opportunities, will decline. With a collapsed tourism sector, this will allow the country little foreign exchange to buy the things it needs.
In this situation, what can countries like Sri Lanka do? There are a few simple answers to this question. First, reduce imports to match the reduction in foreign exchange sources. Second, find new foreign markets to replace the declining economies. Third, find new products to replace the ones currently being exported. Fourth, develop the domestic market for domestic products, to advance the economy.
Of course, walking the talk will be less simple. How can it be done? The path taken by the USA is the road to ruin, while Sri Lanka does not have the financial resources to emulate China or Germany – although it can emulate many of the measures they have put in place, on a far smaller scale. It remains for the state to create the policy parameters to drive recovery on new paths, using our existing resources, and developing indigenous knowledge. New technology will be a large part of this, but we must use it wisely. We have an educated population which can adapt itself rapidly to new skills. That is our biggest resource in this economic battle.
Vinod Moonesinghe
Opinion
Can a punishment-free child become a threat to Sri Lankan society?
Children are the future of every nation, and the values they learn during childhood shape the society they will eventually lead. In Sri Lanka, where family traditions, respect for elders, and social responsibility have long been important cultural values, the way children are raised remains a topic of great interest. In recent years, many parents and educators have moved away from traditional forms of punishment and embraced more child-friendly approaches to discipline. While protecting children from physical and emotional harm is essential, an important question arises: can a child who grows up without any form of punishment or consequences become a threat to Sri Lankan society?
To answer this question, it is necessary to understand the difference between punishment and discipline. Punishment is often associated with penalties imposed for wrongdoing, while discipline refers to teaching children self-control, responsibility, and respect for rules. Modern child psychology generally discourages harsh physical punishment because it can cause fear, anxiety, and resentment. However, completely removing consequences for inappropriate behavior may create a different set of problems.
Sri Lankan society has traditionally emphasized discipline within the family. Parents, grandparents, and teachers have often played active roles in guiding children’s behavior. Respect for elders, obedience, and good manners have been considered important virtues. While some traditional disciplinary methods may no longer be acceptable, the underlying principle of teaching accountability remains relevant.
A child who never faces consequences for wrongdoing may struggle to understand the boundaries that exist in society. For example, if a child is allowed to insult others, damage property, or ignore rules without correction, they may develop the belief that their actions have no consequences. Such attitudes can become problematic when the child enters school, the workplace, or the wider community.
Sri Lankan schools already face challenges related to student discipline. Teachers often report difficulties in managing classrooms where some students refuse to follow instructions or respect school regulations. When children are not taught accountability at home, educational institutions may find it harder to maintain a productive learning environment. This can affect not only the individual student but also classmates whose education is disrupted.
Another concern is the development of entitlement. A child who is never told “no” may come to believe that personal desires should always be fulfilled. In a society where cooperation and mutual respect are essential, such attitudes can lead to conflicts with peers, teachers, employers, and even family members. Sri Lanka’s social fabric depends heavily on community relationships, and individuals who fail to respect others can weaken these bonds.
The influence of social media and modern technology has added another dimension to this issue. Today’s children have access to information and entertainment on an unprecedented scale. Without proper guidance and consequences, some may misuse technology, engage in cyberbullying, spread misinformation, or develop unhealthy habits. Parents who avoid setting limits may unintentionally expose children to risks that affect both personal development and social well-being.
The workplace offers another example of why accountability is important. Sri Lanka’s economic development depends on a workforce that is disciplined, responsible, and capable of working with others. Employers value punctuality, respect, and professionalism. Individuals who grow up without learning responsibility may find it difficult to meet these expectations, affecting both their personal success and the productivity of organizations.
However, it is equally important not to interpret this argument as support for harsh punishment. Research has shown that excessive physical or emotional punishment can have serious negative effects on children. Fear-based parenting may produce obedience in the short term but can damage confidence, trust, and mental health in the long term. Therefore, the solution is not stricter punishment but more effective discipline.
Positive discipline provides a balanced alternative. It involves setting clear rules, explaining expectations, and applying fair consequences when those rules are broken. For instance, if a child neglects schoolwork, they may lose certain privileges until responsibilities are fulfilled. If they damage property, they can be required to help repair or replace it. Such consequences teach accountability while preserving the child’s dignity.
Sri Lankan parents, teachers, and community leaders all have a role to play in nurturing responsible citizens. Families should create environments where children feel loved and supported but also understand that actions have consequences. Schools should encourage character development alongside academic achievement. Religious and community organizations can reinforce values such as honesty, compassion, and respect for others.
A balanced approach is especially important in a rapidly changing society. As Sri Lanka continues to modernize and integrate with the global community, young people must learn not only their rights but also their responsibilities. Freedom without responsibility can lead to selfishness, while discipline without compassion can lead to fear. The challenge is to find the middle ground.
A punishment-free child can become a concern for Sri Lankan society if the absence of punishment also means the absence of discipline and accountability. Children who never learn consequences may struggle to respect rules, authority, and the rights of others. However, harsh punishment is not the answer. The most effective approach combines love, guidance, clear boundaries, and fair consequences. By raising children who understand both freedom and responsibility, Sri Lanka can build a future generation that strengthens society rather than threatens it.
Saumya Aloysius
(An essayist, children’s writer and freelance writer who holds a Master’s Degree in Sociology from the University of Kelaniya)
Opinion
SriLankan Airbus struck by lightning
On Friday 12 June, 2026, a SriLankan Airlines Airbus 330 was en route from Colombo to Sydney, Australia was about 45 minutes into its flight when a loud bang was heard, accompanied by a blinding flash. In what was assumed to be a lightning strike, the airplane’s left (No. 1) engine was damaged, forcing the aircraft to return to BIA-Katunayake, where it landed safely.
Lightning travels from cloud to cloud or cloud to ground. Because the aircraft is not electrically ‘grounded’, or ‘earthed’, it must have been in the path of the thunder bolt purely by chance. There is also a phenomenon whereby the aircraft may travel through an electrically charged atmosphere (for example a cloud) where an electrical charge could build up and strike, or be emitted, as lightning. In such an instance, pilots hear electrical static in their headsets before the strike. Usually, when lightning strikes an aircraft in flight, the electrical charges remain on the outside, as on a ‘Faraday’s Cage’ apparatus, and the passengers and crew are perfectly safe.
To help the efficient and safe discharge of static electricity from the airplane’s structure, static wicks, or static dischargers, are fitted at the trailing (rearmost) edges of the wings and tail surfaces. When an airplane has landed after a lightning strike, ground engineers count the number of wicks that may have been burnt out to ensure that a minimum (recommended) number is available for a subsequent flight. Sometimes, there is minor damage, like pitting of the paintwork at the points where the charges left the aircraft.
The last instance in the USA of an airplane believed to have been lost due to a lightning strike was on December 8, 1963, when a Pan Am Boeing 707-121, en route from Baltimore, Maryland to Philadelphia, Pennsylvania, suffered a fuel tank explosion, later determined to have been the result of a lightning strike. Since then, aircraft have been rendered immune from lightning damage thanks to extensive research conducted by manufacturers using high-voltage currents.
Interestingly, modern airliners have electronic instrument displays which don’t even flicker when the aircraft is struck by lightning. By a process of connecting all the metallic parts, known as ‘bonding’, the entire fuselage effectively becomes a protective cocoon, so electrical charges caused by lightning will always reside on the outside of the aircraft.
What is unusual in the recent SriLankan Airlines incident is the extent of damage to the left engine. Did it encounter hail or ingest something?
Only a thorough, independent inquiry by aviation safety investigators will reveal the cause.
GUWAN SEEYA
Opinion
Beyond diagnosis: A strategic design for 7% growth by 2029 (Part I)
“Vision without execution is hallucination.” – Thomas Edison
Introduction: Stabilisation Is Not Transformation
Sri Lanka has come a long way since the economic collapse of 2022. Inflation has been brought under control. Foreign reserves have improved. Debt restructuring has advanced. Government revenue has increased significantly through taxation reforms. The exchange rate has stabilised, and confidence has gradually returned to financial markets.
These achievements deserve recognition.
However, stabilisation should not be confused with economic transformation. A patient discharged from intensive care is not necessarily healthy. Likewise, an economy that has escaped collapse has not necessarily achieved sustainable prosperity.
The central economic question facing Sri Lanka today is no longer how to avoid another crisis. Rather, it is how to achieve sustained economic growth of at least 7% per annum by 2029.
Unfortunately, much of the current policy debate remains trapped in economic diagnosis. Policymakers, economists, and commentators repeatedly identify familiar problems: (i) low productivity, (ii) weak exports, i(iii) Inadequate innovation, (iv) poor competitiveness, and (v) insufficient investment. While these diagnoses are correct, they are not new.
Sri Lanka now needs economic engineering.
The country requires a clear, measurable, and actionable National Growth Strategy for 2026-2029 that identifies (i) where growth will come from,(ii) what investments are required,(iii) which institutions will lead implementation, and (iv) how success will be measured.
The difference between diagnosis and engineering is the difference between describing a problem and solving it.
The Missing National Growth Target
One of the most striking weaknesses in Sri Lanka’s economic discourse is the absence of a publicly articulated growth target supported by a detailed implementation framework.
Successful economies establish measurable objectives.
Sri Lanka should adopt the following growth trajectory:
2026 – 4%
2027 – 5%
2028 – 6%
2029 – 7%
Such targets would provide direction to investors, public institutions, universities, exporters, and development partners. Without a destination, even the best policies risk becoming disconnected initiatives.
Today, many policy interventions appear fragmented—valuable in isolation but lacking integration into a broader national growth framework.
Growth Will Not Come From Consumption
For decades Sri Lanka relied heavily on consumption, imports, remittances, tourism, and external borrowing.
That model has reached its limits.
No country has achieved sustained prosperity through consumption-led growth alone.
The countries that transformed themselves—Singapore, South Korea, Ireland, Vietnam, and China—generated growth through productive investment, exports, industrialisation, and integration into global markets.
Sri Lanka’s future growth must therefore be driven by investment and exports rather than domestic consumption.
The challenge is not increasing spending but increasing productive capacity.
Export-Led Growth: The First Pillar of Transformation
Every successful Asian growth story has one characteristic in common: exports.
Exports generate foreign exchange, create jobs, attract investment, encourage innovation, and improve productivity.
Sri Lanka should establish an ambitious target of doubling export earnings within the next decade.
This requires moving beyond traditional exports and expanding into:
High-value agriculture
Food processing
Information technology services
Logistics services
Advanced manufacturing
Professional services
Export growth must become a national mission comparable to post-war reconstruction efforts seen elsewhere in Asia.
Without a major expansion of exports, sustained 7% growth will remain elusive.
Manufacturing: The Forgotten Growth Engine
Manufacturing remains the single most important source of rapid economic transformation worldwide. Vietnam provides perhaps the best recent example.
Through (i) industrial zones, (ii) trade agreements, (iii) infrastructure development, and (iv) targeted investment attraction, Vietnam became deeply integrated into Asian production networks.
Sri Lanka possesses strategic advantages:
A prime Indian Ocean location
Strong port infrastructure
Educated labour force
Proximity to India
The country should establish specialised manufacturing clusters focusing on:
Electronics assembly
Medical devices
Processed food products
Boat building
Rubber-based products
Engineering components
Rather than attempting to compete with every country, Sri Lanka should specialise in selected niches where competitive advantages can be developed.
RCEP: The Strategic Door to Asia
Sri Lanka’s future lies increasingly in Asia.
The Regional Comprehensive Economic Partnership (RCEP) represents the largest trading bloc in the world and includes many of the fastest-growing economies.
Membership or closer integration with RCEP supply chains could provide Sri Lankan exporters with access to markets, investment, technology, and production networks that are currently beyond reach.
Unfortunately, discussion on RCEP remains limited compared with its strategic significance.
A dedicated national roadmap for RCEP engagement should become a top economic priority.
The question is not whether Sri Lanka can afford to integrate more deeply into Asia.
The question is whether Sri Lanka can afford not to.
Knowledge Economy: Turning Universities Into Growth Institutions
Sri Lanka’s universities produce thousands of graduates annually, yet their contribution to commercial innovation remains limited.
Globally, universities have become engines of economic development.
Research institutions should not merely produce graduates; they should produce patents, technologies, startups, and commercial solutions.
A national innovation framework should:
Link universities with industry
Encourage commercialisation of research
Support technology transfer
Expand startup financing
Reward innovation and entrepreneurship
Knowledge must become an economic asset rather than an academic exercise.
Dairy, Agriculture, And Import Substitution
Export growth alone is insufficient.
Sri Lanka must also reduce unnecessary import dependence.
The dairy sector offers a compelling example.
For decades, billions of rupees have left the country through dairy imports despite favourable climatic conditions and substantial agricultural potential.
A comprehensive dairy development strategy should focus on:
Improved genetics
Feed production
Commercial farming
Processing investment
Farmer productivity
The objective should be import substitution combined with rural income growth.
The same principle can be applied selectively to other sectors where domestic production is economically viable.
Creating A National Investment Targeting Agency
Sri Lanka does not need another bureaucracy.
It needs a professional institution dedicated exclusively to investment targeting.
Instead of passively waiting for investors, this agency would actively identify and attract strategic investments aligned with national priorities.
Its mandate would include:
Identifying priority sectors
Marketing opportunities globally
Coordinating approvals
Monitoring outcomes
Facilitating technology transfer
Singapore’s Economic Development Board and Ireland’s Industrial Development Agency demonstrate how targeted investment institutions can transform national economies.
Sri Lanka requires a similar mechanism adapted to local realities.
From Economic Diagnosis To Economic Engineering
The next stage of Sri Lanka’s recovery requires a fundamental shift in thinking.
The policy debate must move beyond identifying problems. The country already knows its problems.The challenge is implementation.Every policy proposal should be evaluated against a simple question:
Will this contribute to achieving 7% growth by 2029?
If the answer is no, resources should be redirected.
Economic engineering requires focus, prioritisation, accountability, and measurable outcomes. The era of fragmented initiatives must give way to a coherent national growth strategy.
Summary
Sri Lanka has achieved significant macroeconomic stabilisation, but stabilisation is only the first step toward sustainable prosperity.
To move from recovery to transformation, Sri Lanka should adopt a National Growth Strategy for 2026-2029 built around five pillars:
Export-led growth
Investment-led growth
Manufacturing expansion
Knowledge-economy development
Regional integration through RCEP and Asian supply chains
Supporting sectors such as dairy, tourism, logistics, and information technology should be strategically developed within this framework.
Most importantly, investment must be targeted rather than scattered, supported by specialised institutions and measurable performance indicators.
Conclusion
History demonstrates that no nation has become prosperous by accident. Economic success is rarely the product of isolated policies or short-term political initiatives. It is the outcome of a deliberate strategy pursued consistently over many years.
Sri Lanka stands at a crossroads.
One path leads to modest growth, periodic crises, recurring debt challenges, and continued vulnerability. The other leads to transformation through investment, exports, innovation, manufacturing, and regional integration.
The choice is ultimately strategic.
The time has come for Sri Lanka to move from economic diagnosis to economic engineering.
The future will not be determined by how successfully the country stabilised after the crisis. It will be determined by how effectively it builds the foundations for sustained growth thereafter. If Sri Lanka can articulate and execute a coherent investment-led growth strategy today, achieving 7% growth by 2029 need not be an aspiration.
It can become a national objective—and a national achievement, economic Engineering
The writer, among many, served as the Special Advisor to the Office of the President of Namibia from 2006 to 2012 and was a Senior Consultant with the UNDP for 20 years. He was a Senior Economist with the Central Bank of Sri Lanka (1972-1993). He can be reached via asoka.seneviratne@gmail.com
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