Sri Lanka: More Conflict Less Inflation?

In this blog, I try to cover South Asian business and economy news. That is why, every day, I try to take a look at the media headlines of Sri Lanka. It seems that these days, it is all about conflicts and war in the country. That is why, this news item caught my eyes today that rate of inflation is going to decrease in February 2009 compared to a year ago at the same month. This news may come as a shock to some of you as it is normally expected that when there is civil war in a country, the inflation must increase as agriculture and industrial productions get disrupted.

The reason behind the decrease in inflation is that because of global economic recession, the price of many commodities has fallen in the international market. Another thing that had decreased a lot is oil price. As a result, there should be less pressure on importers in the country and the ordinary people are enjoying the benefit.

Well, it seems that the on going civil war is affecting the country in another area: balance of payments crisis. It is perhaps time that Sri Lankan decision makers start to give the same amount of focus on country’s economy like the civil war.

(This entry was first published in February 2009. Because of a technical problem, the entry had to be deleted and I am reposting again now.)