Why should there be great prospects for an economy, when the general circumstances are extremely bad, and there are job losses and a huge negative disruption of markets — such as what obtains now during the pandemic?
Positive economic prospects seem virtually impossible in times of a raging worldwide calamity such as the spread of Covid-19. But long term economic prospects from the current downturn in this country, look better in contrast to the economy that prevailed in ‘normal times’ during the last regime.
It’s because most economics is about ‘perception’. The US Ambassador here in Colombo Ms. Alaina Teplitz said that the election results in Sri Lanka show that as far as the previous administration is concerned, people did not like what they saw. She should be thanked for her frank but accurate appraisal of the former regime. The US can and has been a great friend of this country, and there is no need to take everything that comes out of the mouths of US diplomats as disingenuous, or consider the U.S as an inimical force. Ms. Teplitz signals in no uncertain terms that the United States of America is our sincere friend.
It’s the overall positive vibes that have come out of the Gotabaya administration that hold exciting prospects for the economy, when we are gradually sliding back to normalcy from the depths of a vicious downturn.
RETURNING
Many Democrats in the US will certainly take issue with me for stating this, but the same prognosis seems to be true in certain ways for the US. The Nasdaq is rising and there are signs that on the rebound, the US economy will be stronger than ever. The country may be reeling from the impact of Covid-19, but there is positivity when job numbers are rising fast and people, despite everything, are returning to work.
Positive messaging in Sri Lanka is not necessarily flowing from the two thirds-majority even though that and the brand new government helps. It’s because there is foremost, a certain image of policy cohesiveness.
The previous regime was all over the place, and that’s putting things mildly. When the Volkswagen Management denies the announcement that the car manufacturers’ much heralded plant here is a figment of some Minister’s imagination, the message is that the government is bungling.
The positive signalling comes these days from the fact that the government is intent on getting things done, and has relegated the promotional pizzaz to second place. The previous regime telegraphed everything they said they were going to do, but the accomplishments woefully did not match the messaging. The Volkswagen factory fiasco was one example. The google-loon debacle spearheaded by Harin Fernando was another.
FLAPPING
But emerging from the pits of the Covid-19 havoc, this Government got its messaging right. There is also the tendency to stick to policy. Even State institutions are sticking to staggered shifts and Covid-19 work from home policies, with Ministers not working at cross purposes with each other. It’s a take charge vibe.
This resonates, and contrasts sharply with the general tack of the previous regime which was to interrupt everything it undertook with a side serving of comedy. Volkswagen and google loon comedy aside, there was the ex Prime Minister flapping his arms about in the well of the House and leading cheers of kaudahoraa to a chorus of prep school like shrieks from his benches.
This kind of slapstick pulled the rug from under the feet of the planners, and the thing about the planning was that such planning always ended up telegraphing another follow-up plan, and so, there were plans unfolding on an endless loop.
Who was responsible for this messaging pantomime? The answer is nobody and everybody in that government. The positivity of today’s regime comes from the fact that it’s willing to try out small things at scale — while getting the macro-economics right simultaneously.
Coming out of the pandemic, the Government did not — repeat did not — take former Finance Minister Samaraweera’s advice to starve the economy of money until the reserves are shored up, and there is a bulging kitty, nationally speaking. Instead, all incentives were given for people to borrow at low interest, and start, or rather re-start small.
But ‘small’ was taken seriously because ‘big’ was out of the question. Markets for exports had all but vanished. But small markets were emerging for enterprise within the country. It’s why the State Ministries became so subject specific, and there were slots dedicated in the gazetted State Ministries for batik, and clay based products.
This led to a good deal of mockery from the current Opposition benches but unbeknownst to them the Government was working to a plan coming out of a vicious downturn, and those were the positive vibes exactly, that are now cranking the economy onto an upward spiral, even in the midst of a serious crisis in global markets.
Extraneous factors also matter, and have added to the positive vibes and the perception surge. Ranking perhaps close to the number one spot in positive perception messaging is the fact that the law and order situation is finally coming under control. The drugs and the prisons-usurpation menace by underworld elements has been confronted head on, but also there is a no nonsense attitude about other law and order breaches such as extortion gangs operating with impunity, and other brittle points that were never addressed by the previous regime in any meaningful way.
BUMBLING INTERVIEW
Anybody asking what these have got to do with positive economic numbers simply does not know what they are talking about. Positive perceptions start at the top, right at the apex, of resurgent economic activity. Everything follows from positive perceptions, rather than vice versa. The economic blueprints don’t usually lead to positive perceptions, it’s the other way around — positive perceptions lead to a great economy, that then has to be planned and managed.
All this is not to say that economic recovery will be instant. That would be impossible under post-pandemic conditions of a colossal global slump. But the positive perceptions seem on the one hand to propel the country towards economic survival based upon a largely internal economy of local produce for local consumers. On the other hand a full recovery eventually that is better than what was there before it, seems on the cards.
Diehard SLPP and Rajapaksa critiques such as former President Chandrika Bandaranaike Kumaratunga have tried to spin the SLPP victory as being largely due to an Opposition that was divided, rather than the merits of the SLPP per se. But then in a bumbling interview she contradicts herself and says that in such a climate of divided Opposition loyalties, a strong politician such as Mahinda Rajapaksa was able to engineer a two-thirds win.
If she reckons Mahinda Rajapaksa is formidable, he is formidable, and there is no such thing as ‘he is formidable, but’. His party’s two-thirds win cannot be explained by saying that the Opposition was weak except to the extent of saying that the Opposition was weak precisely because the Rajapaksa led SLPP was so strong.
That strength forced the UNP to split into a breakaway faction and if the SLPP was not strong as it was, the UNP would have contested under Ranil Wickremesinghe’s leadership and been done with it.
But the SLPP was powered to a two-thirds largely by the way the economy was handled and the way the pandemic was controlled. Nothing succeeds like success, and from thereon the positive perceptions have grown exponentially almost. It’s in this context that those such as Harsha de Silva who talked of negative growth in March and the lockdown months will have a lot of egg on their faces when the economy begins to grow as the global markets improve after the pandemic tamps down worldwide sometime next year.
But the positive perceptions have required a great deal of hard and focussed work on the part of the planners, and the Government’s team. Workaholic dedication to the cause has worked.