Business

Shopping is going to be a lot more painful in 2022

Published

3 years ago

2021/12/24

Bloomberg News The great rotation in consumer spending continues.

When the world shut down in 2020, we bought what we needed to stay home: Pelotons, pets, sweatpants and sourdough starter. In 2021, our shopping reflected reopening: We put on lipstick again, whitened our teeth and swapped loungewear for chinos and dresses. Most consumer, retail and luxury groups had a pretty good year.

But consumer sectors are now facing another shift in habits, and this one may not be as favorable.

The omicron variant is a headwind for travel, hospitality and retail. Even if the latest wave of infections peaks relatively soon, there are other perils ahead — from lockdown savings being exhausted just as prices are rising to tighter monetary policy and higher borrowing costs, something consumers haven’t had to endure for several years.

Already, the cracks are beginning to show.

Even before the surge in omicron cases, there were signs of consumers becoming more cautious. British retailer Currys Plc, for example, said demand for its electronics was weaker than expected. And amid fewer people heading into city centers and offices, famous London department store Harrods brought forward its sales from Dec. 26 (Boxing Day) to Dec. 17. Other metropolitan areas, such as New York City, have also been suffering.

But it’s not just the new variant weighing on shoppers’ minds. U.S. retail sales less than forecast back in November. True, some spending may have been pulled forward to October, when many retailers ran special offers and consumers shopped to avoid product shortages. But the real concern is that rising prices have finally begun to take their toll.

Up to now, consumers have been able to withstand accelerating inflation on everything from coffee to coffee tables. Many were flush with savings after being homebound for much of the past two years. But reopening economies drew down that cash.

And now prices are rising at an even faster clip. Most consumer-goods companies are already negotiating price hikes with retailers or will start in January. With inflation coming through in commodities from oil to packaging, that will make for some difficult conversations. It is also likely to lead to further spikes. U.S. food prices rose 6.1% in November, the highest level in 13 years. We could see a similar escalation in Europe.

Although wages are increasing too, U.S. inflation is outpacing it by some distance: The gap between the two is the biggest it’s been for more than 20 years.

Some of the caution Currys has seen may reflect a spending squeeze already under way in Britain. After all, a new laptop, iPhone or oven is a large purchase. In the U.S., Lowe’s Cos. said it expected the pandemic home improvement boom to finally wane.

Many people spent big during the pandemic, especially on new homes. This might be another source of weakness as interest rates rise. Higher borrowing costs are expected in 2022, which could lead Americans and Europeans to pull in the purse strings.

While large, expensive items may be the first to feel the pinch, other areas will eventually suffer too. Consumers have a tendency to trade down from big brands to cheaper private labels, or switch from meat to vegetable-based meals, when stressed about their wallets. Cutting back on indulgences that grew during the pandemic, such as ordering takeout, would be another way to save money.

There are some silver linings. Although the arrival of omicron is hurting travel and leisure, it may, in the short term, ease some of the forthcoming consumer pain. Working from home again means saving money on commuting and lunches out. Hopes for a “revenge Christmas” this year — going all out to make up for a bleak 2020 holiday — are already looking fragile, as some people cancel their restaurant reservations and plans to hold large gatherings.

January is always a grim month for retailers, restaurants and bars. It’s when credit card bills land and trends such as dry January and Veganuary take hold. But this year it could be even more brutal.

It’s a timely reminder that, like stocks, consumer rotations don’t only go one way. – Bloomberg

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Business

ADB urges SL to accelerate recovery with fiscal discipline and global trade shifts

Published

8 hours ago

2025/04/11

Thilina Walpola

ADB Sri Lanka unveils the Asian Development Outlook April 2025 report, in Colombo on April, 9.

Recommends prudent policy choices and regional collaboration

The Asian Development Bank (ADB) has highlighted Sri Lanka’s economic recovery as exceeding initial expectations in its Asian Development Outlook April 2025 report, but cautioned that the rebound remains fragile, with significant risks posed by global trade tensions, fiscal pressures, and unresolved debt vulnerabilities.

The following are some key highlights from the report:

Sri Lanka’s economy is projected to grow at a moderate pace in 2025–2026, driven by broad-based improvements. However, domestic demand is expected to stay sluggish, reflecting lingering challenges from the country’s recent economic crisis. While fiscal consolidation efforts remain on track bolstered by stronger-than-anticipated revenue. With that said, however, the ADB warned that under-execution of capital spending or a loss of reform momentum could derail progress.

Takafumi Kadono, ADB Country Director for Sri Lanka, brings profound expertise in both macro and microeconomic dynamics, steering transformative development support tailored to Sri Lanka’s evolving needs

After a period of deflation, Sri Lanka’s inflation is forecast to rise in 2025 due to higher electricity tariffs, relaxed import restrictions, wage hikes, and exchange rate depreciation. The government’s commitment to fiscal discipline faces pressure from potential expenditure increases, even as external debt interest payments resume, pushing the current account into deficit.

The ADB’s analysis of new US tariffs, identifies Sri Lanka as vulnerable to trade disruptions. Key risks include:

Sri Lankan exporters, particularly in sectors with thin profit margins, face order cancellations and profit losses.

Competitors like India, Malaysia, and Mexico—benefiting from lower US tariffs—could attract investment away from Sri Lanka.

Full implementation of tariffs could slash GDP growth by depressing exports, manufacturing, and investor confidence, while raising unemployment and fiscal strains.

To mitigate risks, the ADB urges Sri Lanka to diversify export markets and products. Opportunities include expanding into niche EU markets and Asian regional partners, as well as boosting high-value sectors like electronics. Strengthening regional cooperation and accelerating structural reforms could enhance resilience.

Despite progress under its IMF program, Sri Lanka’s debt burden remains “high,” requiring sustained reforms to stabilise public finances. The ADB emphasised that fiscal reversals or delays in restructuring could undermine macroeconomic stability.

While South Asia remains the fastest growing subregion fueled by India’s robust domestic demand, Sri Lanka’s trajectory is distinct, marked by post-crisis recovery challenges. Developing Asia’s overall growth is moderating due to US-China trade tensions and China’s property sector woes, further complicating Sri Lanka’s external environment.

“Sri Lanka’s recovery is commendable but incomplete,” the report states. “Accelerating reforms, safeguarding fiscal discipline, and diversifying trade partnerships are critical to navigating global headwinds and ensuring long-term stability.”

As Sri Lanka balances optimism with fragility, the ADB’s outlook underscores the urgency of maintaining reform momentum while preparing for escalating external risks. The path to sustained recovery, concludes, hinges on prudent policy choices and regional collaboration.

By Sanath Nanayakkare

Business

HOPPR Unveiled: PayMaster’s latest innovation that transforms ride-hailing and digital credit access

Published

8 hours ago

2025/04/11

Thilina Walpola

PayMaster, the leading, award-winning digital payments app in Sri Lanka, has announced its launch of HOPPR, a cutting-edge ride-hailing feature that will transform the market by providing all stakeholders from drivers and customers with financial independence through digital payments and credit access. More than just a ride-hailing service, HOPPR is a tool for financial empowerment that works in unison with PayMaster to allow users to schedule rides without using cash and to open up long-term revenue streams.

A sustainable revenue strategy is established by its unique referral system, which allows drivers to receive lifetime earnings for each user referred, emphasizing that both passengers and drivers are not just participants but valued stakeholders of the platform. Additionally, CREDDY, an AI-powered credit system that acknowledges informal income streams, is connected with HOPPR where drivers can obtain revolving credit of up to Rs.50,000 at 0% interest through CREDDY for everyday expenses, fuel, and vehicle repairs, assisting in closing gaps in their finances and fostering financial stability.

Ransika De Silva, Director/CEO of PayMaster, stated, “With HOPPR, we have built a driver-centric system where each ride is an opportunity to earn, save, and grow financially rather than just a journey. We are changing the financial landscape for gig workers and informal earners, starting with ride-hailing, digital payments, credit access and future expansion into areas for informal income.”

PayMaster is a one-stop app for payments that makes transactions in Sri Lanka easy. From local money transfers, receiving money from around the globe to a local account within two seconds, paying bills, and topping up mobile accounts, users can now also use ride-hailing services thanks to HOPPR. PayMaster, a fully owned subsidiary of Singapore-based FinTech FirstPay (Pte) Ltd, guarantees the highest international security standards by following the criteria for mobile apps from the Central Bank of Sri Lanka (CBSL) and submitting to frequent security assessments conducted by a globally reputed auditing firm.

Business

CSE launches in bullish vein, energized by US President’s ‘90-day pause’

Published

8 hours ago

2025/04/11

Thilina Walpola

The CSE opened yesterday in a bullish manner after US President Donald Trump announced a 90-day pause on enforcing increased tariffs on exports.

President Trump said he is ordering a pause on ‘reciprocal’ tariffs slammed on Sri Lanka and other countries after 75 countries offered to negotiate, amid a collapse of stock markets, but a 10 percent tax would remain. Many stock markets around the world were back in the green.

The All Share Price Index was trading up on 693 points within the first half hour of opening and the more liquid S&P SL20 was up 6.42%, or 286 points, at 4,632.00.

Turnover was Rs 6.1 billion with ten crossings. Those crossings were reported in JKH which crossed 30.7 million shares to the tune of Rs 607 million and its shares traded at Rs 20.10, Sampath Bank 3.7 million shares crossed for Rs 419 million; its shares traded at Rs 150, Commercial Bank 2.2 million shares crossed for Rs 151 million; its shares traded at Rs 125.

Singer (Sri Lanka) 1.5 million shares crossed for Rs 52.5 million; its shares traded at Rs 35, Vidul Lanka 3.7 million shares crossed for Rs 49.4 million; its shares traded at Rs 13.50, People’ Leasing 2 million shares crossed to the tune of Rs 35 million; its shares sold at Rs 2.70, HNB 100,000 shares crossed to the tune of Rs 30.5 million, Hemas Holdings 210,000 shares crossed for Rs 23.4 million; its shares traded at Rs 117, LMF 500,000 shares crossed to the tune of Rs 21.4 million; its shares fetched Rs 42.70 and DFCC 200,000 shares crossed to the tune of Rs 20 million; its shares traded at Rs 100.

In the retail market top six companies that have mainly contributed to the turnover were; Sampath Bank Rs 709 million (6.2 million shares traded), Commercial Bank Rs 626 million (4.4 million shares traded), HNB Rs 619 million (two million shares traded), JKH Rs 346 million (three million shares traded), RIL Properties Rs 164 million (10.3 million shares traded) and Brown’s Investments Rs 161 million (22.1 million shares traded).During the day 212 million shares volumes changed hands in 23287 transactions.

Yesterday, US dollar buying rate was Rs 297.50, while the selling rate was Rs 298.60.

By Hiran H Senewiratne