Industrial production ploughs ahead in Jan. indicating manufacturing revival

Sri Lanka’s industrial production continued to hum as the index, which captures the manufacturing firepower of the country, added gains in January with wearing apparel making a comeback after a decline in December 2020. 

The Index of Industrial Production (IIP) added 0.2 percent gain in January 2021 to 108.3 index points, from the same month in 2020. 

What is notable in the index performance in January was the gain made by the wearing apparels, a major sub-index, out of seven, which logged a robust gain of 5.3 percent. 

Even though this wasn’t reflected in the January’s merchandise exports data, the positive IIP for wearing apparel in January is revealing that orders are being restored and the future looks promising.  

Meanwhile, the domestic textiles industry which lost momentum has also met with newfound optimism with the government patronage and entrepreneurial renaissance happening locally where lot of women entrepreneurs joining the sector. 

As economies in the West and the Europe expected to re-open with the current vaccination drive, the orders which were held up earlier due to the pandemic is now coming again, specially for fashion clothing.

Meanwhile, the food products and beverages sub-sectors, which held up amid the crisis saw a decline in their relative sub-indices in January 2021, with a declines of 11.2 percent and 4.0 percent over the same period last year.

Recent readings of the IIP are also an indication that Sri Lanka is trying to re-build its lost industrial muscle after the unrestrained economic opening in 1978 destroyed it.

While free and fair trade is an integral prerequisite for economic freedoms and the functioning of a liberal democracy, that is ought to come at the expense of jobs and economic wellbeing of people. 

Cheaper imports don’t mean anything when people earn meager incomes due to loss of well paying jobs due to unrestrained trade liberalisation.  

The absence of robust and sustainable manufacturing bases left a large swath of Sri Lankans unskilled, forcing more than a million in their prime working ages to engage in unproductive taxi driving and another two million to seek foreign employment. 

Meanwhile, local enterprises experience an acute labour shortage. Extremely higher labour costs have made some small businesses to close shops.