- Earnings reach US$ 341.8 mn in January 2024
- Robust tourist income seen for the first time since Feb. 2020
- Sustained momentum could position tourism as a bright spot in SL external sector once again
In a promising sign for Sri Lanka’s economy, tourism earnings soared to a pre-pandemic peak of US$ 341.8 million in January 2024.
This resurgence indicates a significant recovery for the industry, which faced a prolonged downturn since the onset of the pandemic four years ago.
This milestone marks the first time since February 2020, when earnings reached US$ 391.1 million. The industry was then rebounding from the aftermath of the 2019 Easter attacks and bracing itself just weeks before the country reported its first locally transmitted Covid-19 case, triggering nationwide lockdowns.
In the recent past, Sri Lanka experienced a surge in arrivals, grabbing daily headlines and signaling a promising outlook for the tourism industry in 2024. This expansion, potentially leading to the highest number of arrivals and trade earnings since the record highs of 2018, is a notable development.
Back in 2018, Sri Lanka welcomed 2.33 million tourists, generating an impressive US$ 4,328.1 million. Fast forward to January this year, the country saw a significant increase in visitors, with 208,253 arrivals recorded – more than double the figures from the previous year. Provisional data indicated that an additional 60,122 travellers arrived in the first eight days of February alone, setting the stage for even stronger monthly arrivals.
Authorities set ambitious targets for 2024, aiming for 2.4 million visitors and over US$ 4.0 billion in earnings. The positive momentum in arrivals and earnings in 2023, with 1.48 million arrivals and US$ 2,068 million in earnings, marked a return to optimism after three years, positioning tourism once again as a bright spot in the country’s external sector.
The robust recovery in the tourism trade, coupled with remittances, played a crucial role in steering the country past its worst economic crisis triggered by a foreign exchange shortage.
Despite a decline in trade due to the Easter attacks in 2019, tourism and remittances effectively balanced the trade deficit until 2019. However, the pandemic-induced travel restrictions since 2020 led to a significant downturn for both sectors.
Earnings from tourism softened to US$ 3,592.10 million in 2019, generated from 1.91 million arrivals, following the Easter attacks. Subsequently, earnings plummeted to US$ 956.9 million in 2020, with 507,704 arrivals due to the pandemic’s impact.
In 2021, earnings further weakened to US$ 261.40 million, with arrivals totalling 194,495, as prolonged lockdowns during the third and fourth waves of the virus took their toll. However, there was a slight recovery in 2022, with earnings reaching US$ 1,136.3 million from 719,978 arrivals, though the economic crisis continued to pose challenges.
- https://www.dailymirror.lk/business/January-tourism-revenue-soars-to-pre-pandemic-peak/215-276801
Remittances income up 11.4% in January
Earnings from remittances from Sri Lankan migrants rose by 11.4 percent in January 2024 to US$ 487.6 million, continuing the months-long increase in the country’s largest foreign exchange inflow.
While this was a decline from the US$ 569.7 million received in December last year, this is far from a concern as December and March typically stand out as high remittance income months due to cultural and seasonal festivities.
Therefore the remittances have largely normalised to its pre-crisis levels of around US$ 500 a month.
At the current level, Sri Lanka could generate roughly between US$ 6.0 billion to US$ 7.0 billion from the money repatriated by the migrants, about the same levels the country had been receiving through 2020 before it started coming down from 2021 onwards due to several reasons.
In 2023, Sri Lanka received US$ 5,969.6 million in total remittances, the highest since 2020.
This is because the Central Bank clamped down on informal money changers who were offering significant premiums to that of what the banks offered and the sharp devaluation of the rupee in 2022 drew back many remitters who otherwise sent their money via informal channels.
Sri Lankans working abroad started skirting the official banking channels to send their money back home from around the middle of 2021 after they learned that they could change their foreign currency at higher premiums from informal channels such as Undiyal and Hawala, as the Central Bank had fixed the rupee at around Rs.200 to a dollar.
Politically motivated misinformation campaigns at the time also prevented another substantial segment of migrants from sending their money back into the country.
These developments and the nearly decimated tourism industry due to the pandemic exacerbated the country’s foreign exchange shortages precipitating into the following year’s economic crisis which compounded into an all-out political crisis and a social disorder.
It however now appears that remittances have returned to their pre-crisis and pre-pandemic era strength providing the country’s reserves and the Balance of Payment the much needed heft it once provided, helping among other things to come out of the economic crisis.
- https://www.dailymirror.lk/economy/Remittances-income-up-11-4-in-January/126-276795
