Columns

The devastation caused by Cyclone Ditwah is immeasurable. Its economic impacts and consequences are manifold.

Worse than a tsunami.

The devastation caused by floods and landslides this time is more widespread than the ravages of the tsunami 21 years ago. The 2004 tsunami struck only the coastal areas. The Ditwah devastation was island-wide and more extensive.

Losses

The losses in terms of human lives, dwellings and belongings are immeasurable. More than 800 people are dead or missing, while thousands of houses have been destroyed. Roads, rail tracks and bridges have been damaged. Fortunately, the main irrigation facilities have been spared, and the southern areas of the country have not been adversely affected.

Economic impacts

The focus of this column is on the serious economic impacts of the devastating nationwide floods and natural disasters. The economic consequences are extensive. The damages to agriculture, especially to paddy and vegetable cultivation, are extensive. Food shortages are likely, and they threaten, especially, the food security of the poor.

Agriculture

Undoubtedly, the worst affected sector was agriculture. Stocks of stored paddy, especially in households, have been washed away. The loss of the 2026 Maha cultivation would be disastrous. There is every prospect that some of this crop would have suffered, though paddy is water tolerant.

Paddy

There has been damage to paddy cultivation of the 2026 Maha crop by the floods. It is still uncertain whether a late sowing of the maha cultivation is possible. This possibility could be limited if fertiliser stocks have also been swept away.

Vegetables

Some of the worst affected areas are in the Nuwara Eliya and the Welimada vegetable cultivation belt.

Economic implications

The shortfall in food production has several economic implications. The country’s large rural agriculture population, who constitute a third of the country’s population or about 7 million, have been depressed with no incomes. This is a serious threat to food security in the country. In addition, soaring prices of rice and vegetables would threaten the food security of low-income earners in urban areas.

Food imports

The implication of this is that there would be a need to import large quantities of food. The increased expenditure on food imports would strain the balance of payments at a time when the build-up of reserves is needed to meet the nation’s annual debt repayments and the large debt repayment in 2028.

Tea

Tea production has been severely affected, with the adverse weather preventing plucking, causing severe damage to workers’ houses, and forcing them to move to makeshift facilities for the displaced. Moreover, the rains and landslides hindered the transport of fertiliser. The difficulties in the transport of fertiliser and its application would also be a setback. This in turn would affect the country’s tea exports and earnings.

It is estimated that there would be a drop of about a third of tea output. However, there is a prospect of a rebound of tea production next year once conditions improve.

Prospects

In spite of this gloomy prospect for tea, there is a prospect of the rains increasing tea leaf production in the foreseeable future. Favourable weather in the coming months is vital for the tea industry.

Other crops

Both coconut and rubber may benefit from the rains in due course. The coconut output has not been affected by the rains, and the higher rainfall could result in a higher production of coconuts in 2027. Similarly, rubber trees could benefit by the rainfall.

Industry

It is reported that export processing zone factories have not been adversely affected by the rains and floods. This is difficult to understand, as the Kattunayaka, Ekala and Biyagama EPZs are in flood-affected areas. Furthermore, workers in these factories would have had difficulties in finding transport to their workplaces. Nevertheless, if this is so, it is good news for our industrial exports.

Tourism

One of the worst affected facets of the economy is tourism. Tourist earnings were expected to reach a record US$ 5 billion this year. With negligible earnings in December, this year’s earnings from tourism are likely to remain at around the end-of-November amount. What is even more important is whether the adverse publicity of the cyclone’s impact on tourism will continue in 2026. Tourist earnings in the first half of 2026 are likely to dip. The country’s external reserves that are very much dependent on earnings from tourism are likely to be affected adversely, but this is not certain.

Remittances

Fortunately, foreign remittances are not likely to be affected adversely. In fact, it is likely that Sri Lankan expatriates would send assistance to families and to the government’s effort to reconstruct the country.

Foreign aid

There has been foreign aid from many friendly countries and international organisations. The aggregate of the financial assistance we receive would boost our reserves to some extent.

Summary

The cyclone’s destruction was unprecedented, spreading across the entire island. Unlike the tsunami 21 years ago, which was confined to coastal areas, this disaster reached inland regions, making its impact far more widespread and severe.

Critical infrastructure such as roads, railways, and bridges has been heavily damaged, disrupting transportation and communication. Fortunately, irrigation systems remain intact, offering some hope for recovery in agriculture.

The cyclone has created a multi-dimensional crisis — humanitarian, infrastructural, and economic — that will require extensive rebuilding and long-term support to restore stability and growth.

Concluding reflection

The cyclone has made the task of economic growth more challenging. A united national effort devoid of party politics is the need of the hour. That is unlikely in our political culture and milieu.