31 July 2021 12:56 am Views - 131
The virus-related restrictions on a wide swath of the economy since April third week took a massive toll on the credit card spend by the Sri Lankans, as the virus-controlling bureaucrats blocked nearly every opportunity to spend their money on, including for shopping, travel, leisure, entertainment and dine-in, as they went on a large-scale crack down on consumption activities.
Sri Lanka’s economy is predominantly powered by consumption demand, as it accounts for over two-thirds of the total output, which in 1Q21 sent the growth to an unexpected high
of 4.3 percent.
The total outstanding balance of all credit cards in issue fell by over Rs.2.2 billion during May over April to Rs.119.68 billion, as the cardholders, mostly consisting of salaried people, settled their credit card debt out of their monthly earnings, as they had no other way of spending their money.
The May decline marked the first time in five months of continuous growth in credit card balances. It took many months before it set off to a growth path after the Central Bank slashed the interest rates chargeable on unpaid card balances to 18 percent in August last year, from 28 percent.
The volatility in the outstanding credit card balance, although not a direct barometer of the consumer spending patterns yet in Sri Lanka, it still provides a distant gauge of the consumer spending and sentiments.
Total active credit cards in Sri Lanka is currently at 1.92 million, not even 10 percent of the
total population.
People use their cards mostly on high value ticket items such as electronic and electrical appliances, technology products, restaurant dine-ins, resort stays and general shopping in supermarkets, all of which slowed substantially, if not came to a halt from April 23, when the bureaucrats clamped down on all such activities, citing a virus resurgence.
After being repeatedly struck badly by business-killing restrictions, many joined forces to make their voices heard forcefully, as groups representing myriad sectors such as city hotels, resorts, restaurants, wedding planners, salons and beauty parlours, broader entertainment and retail industry, demanded that they be allowed to engage in their livelihoods under guidelines, before these taxpaying businesses go out of business for good.
The hotel and resorts sector is already seeing a staff turnover, as people are seeking opportunities elsewhere, as the industry, which saw some signs of hope with the return of domestic travellers, was again forced to close, risking the industry with a massive void of skilled hospitality staff, who take years to be trained.