‘Pandemic affects consumers’ spending power’
Local credit rating agency ICRA Lanka says the legacy of the Covid-19 pandemic may leave permanently higher unemployment and lower wage levels in the economy which would in turn affect the spending power of consumers.
ICRA Lanka expects the demand for services to gradually pick up over the course of the next few months and help recover consumer spending.
Endemic means the governments will have to deal with COVID in a more localised fashion while the public will have to continue with the current pandemic-induced lifestyles to some degree, it notes.
The trajectory of domestic inflation in the post-pandemic era will most likely be determined by the path of global commodity prices as well as how soon the global supply chain disruptions are going to fade.
Overall energy consumption may meet the pre-crisis level with occasional dips, pushing up fuel imports leading to more pressure on the balance of payment situation, ICRA Lanka adds.