Tracking new consumption trends

Measuring economic activity is a crucial part of evaluating an economy. Sri Lanka needs to have reliable data to base policy decisions on and to prioritise areas that can get the best returns through policy intervention to fast track growth but there are concerns that at least 0.5% of Sri Lanka’s growth is not being recorded.  

In 2019 Sri Lanka is facing historically high debt repayments and at least two elections. This together with possible weather issues and slowing global growth places significant challenges before the country’s policy makers. Next year will likely bring general elections and more debt repayments in a cycle that is only expected to end in 2022. 

Moreover, with limited resources local policy makers have to know where they can spend time, money, technology and expertise to make changes that could have the most impact to attract investment. This is why in most economically developed countries significant resources are spent to ensure economic activity is tracked accurately. Economies evolve as people attached to that economy change and tracking consumption related spending can often be tricky as it can be both intangible and unpredictable.  

Sri Lanka is expected to have grown by about 3% in 2018, with growth expected to recover to about 3.5% to 4% in 2019. The modest growth of Sri Lanka has to be contrasted with the fact that not only is the country placed in the world’s fastest growing region but it also has an aspirational population. According to a World Bank report released earlier this week South Asia is expected to grow by 7% with India and Bangladesh continuing to show robust economic expansion. Only Pakistan has slower growth than Sri Lanka and while the South Asian region is economically less integrated than other parts of the world there is still potential for collective growth prospects.

The second reason why economic experts think that there is stronger growth in Sri Lanka than what the current numbers show is the levels of conspicuous consumption taking place in townships around the country. Sleepy towns are seeing new supermarkets, fast food restaurants, banks, salons and other services expanding rapidly. Sri Lanka’s urban sprawl is growing beyond traditional cities and enveloping new areas. 

This economic activity is also helped by Sri Lanka’s evolving informal or semi-formal sector. More and more people are opting out of traditional blue collar jobs in industries in favour of being self-employed or working flexible hours. Sri Lanka’s transport sector, for example, has adapted new technology and is now evolving faster than its neighbours. At a recent event an Uber executive was upbeat about Sri Lanka’s three-wheeler sector, which he noted was growing so rapidly as to put Colombo ahead of its many other South and East Asian markets. 

The e-commerce sector is another area where growth can be perceived. Tourism, in particular has benefited from the growth of online booking sites that offer cheap rates and do not require much advance notice. These changing consumption patterns are important as they are directly connected to Sri Lanka’s population, their ambitions and aspirations. No longer are Sri Lankans content with lower paying jobs or working in factories. Therefore policies to develop the economy have to be made to meet these expectations or risk political dissatisfaction. A good place to start is to get correct data.