September industrial production pulls back over lockdowns

• Fresh restrictions contemplated over new variant could spark industry-wide slowdown

Sri Lanka’s industrial production, which measures the manufacturing heft across all its key industrial sectors, fell in September from both August and a year ago levels as the country went into lockdowns again inhibiting the broad based growth hitherto achieved, despite the few exceptions seen in areas such as manufacturing of garments which has a larger weighted in the index. 

According to the Index of Industrial Production (IIP), the key gauge of the country’s manufacturing firepower dented by 0.7 percent from August to 104.3 index points and fell by a sharp 7.9 percent from the same month last year. 

There was a broad based decline in manufacturing activities in sectors from the production of beverages, tobacco products, textiles, leather products, products made out of wood an cork, chemicals, pharmaceuticals, furniture and so on. The food products and wearing apparels expanded from the year earlier levels. The contraction recorded in September pulled back industrial production for the entire third quarter by 2.2 percent from the same quarter last year to  record an index points of 105.0 as it reversed even the slightest advances made by the industrial activates during July and August when the country was open for business for the most part. 

The change in the index in each of the month reflects how sensitive even the manufacturing activities could become for the restrictions imposed from time to time on travel and transport, limitations on the maximum number of people that could be employed at a given time and other safeguards and protective measures imposed against the virus. 

Manufacturing sector largely defied the pandemic induced disruptions compared to the services which require mostly in -person activities which according to health officials could make people sick from the virus, irrespective of wearing the masks or being fully vaccinated, calling into question the efficacy of such things to keep the pandemic at bay. 

The world is once again rattled by the detection of a new variant in South Africa, named Omicron and governments are responding with border closures and tightened restrictions on certain other in-person activities. 

The markets fast went into risk-off mode on Friday on the news as the investors sold risky assets and rushed into safe havens such as government treasuries and gold, another store of value as they were quick to follow the playbook they followed earlier in the pandemic last year. Global stock markets retreated with all three key stock indexes in the United States suffering their worst Black Friday losses. 

Sri Lanka’s stock hit a fresh high on Friday but the country imposed travel restrictions to and from South Africa and a few other neighbouring countries on Saturday and stays cautious. 

However, there is a strong public backlash is sweeping across Europe against restrictions and other forms of mask and vaccine mandates for clamping down on their normal lives for nearly two years as people there have felt enough is enough and have lost their patience and are angry of the false promises given by the governments that the vaccines would bring normality. 

“It’s none of government’s business to decide how I live my life whenever a new variant is found”, said one European national who is fully vaccinated against the virus and is disappointed at the fresh restrictions being re-imposed and contemplated elsewhere in the region.

Austria became the first European Union nation to go into a full lockdown fortnight ago due to rising caseload there even before the Omicron is discovered last Friday.