Global recession and Sri Lanka
These are tough days for everyone and Sri Lanka has started to feel the heat. We are hearing how a renowned group of Companies in Sri Lanka is struggling these days. People are increasingly skeptical on where to invest their retirement funds and EPF funds. Given the current volatility of the private sector, most people will feel safe with the Goverment owned banks and Financial institutions. This will be the trend for sometime to come. Most likely quite a few Leasing and Finance comapnies will go into bust. This would be the case when many people will default on their monthly Leasing or Finance payments. It will be interesting to see how banks face this situation as we have already seen that some were vulnerable and the government had to intervine.
How about investing on new Assets like houses or cars? Given normal circumstances these over time depriciate as assets. But Sri Lanka had a funny situation where a used car could be sold with a hefty profit. Same was for houses. This was not long ago. But things have changed since then.
Car sales have taken a nose dive. Real Estate prices remain Sky High with very few bothered to buy. Banks are reluctant to provide any loans for Cars or Houses. Therefore financing these purchases is extremely difficult for any average person. Im not quite sure for how long this global recession would prevail, but Sri lanka will feel the heat. Our exports to US and EU will be definitely reduced, specially in Garment Exports. Thousands will be layed of. Also the sudden drop in Crude oil prices must be causing a lot of concerns in the middle east. Lot of projects which got initiated when a barrel of oil was 150 US$ must be temporarily or permanently stopped. This means that thousands of migrant workers from our country will have to return to Sri Lanka from the middle east sooner or later or shift into low payed jobs.
In my opinion the safest investment in this climate is in Skills. Spend what ever you can on learning and aquiring new skills. Do your degree, or MSc or MBA. Get qualified. America, Europe even Australia may be laying off now. But when the global economy revives back, we need to be ready with the necessary skills to meet the sudden huge demands from the global economy. Therefore i think the wise decesion is to look at this as an opportunity and get ready since thats all what we could do.
