People on ‘revengespending’ spree...
Sri Lankans appear to be on a revenge spending spree on everything from food to clothing to leisure to consumer durables as they go on shopping, splurging on things, which they couldn’t do for more than a year due to COVID-19.
According to preliminary data coming out from banks on their applications processed for personal loans and the notable rise seen in their outstanding credit card balances during the past couple of months, which act as barometer for recovery in consumer spending in the economy, there is robust increase in consumer related lending.
While the lowest interest rate is only one reason, the biggest catalyst is the returning of normalcy with the vaccination drive, and the people tend to loosen their purse strings to purchase what they want after waiting for nearly a year, unleashing in what is referred to as ‘revenge spending’.
The record savings made last year by the salary income earners is also driving the current revenge-spending spree. And the latest round of stimulus distributed by way of cash handouts to millions of Samurdhi beneficiaries just ahead of the New Year also added tailwind to consumer demand.
Meanwhile, the pent-up demand, which transcended from the last year’s third quarter to the fourth, still has more to run its course aiding the consumer spending and thereby the overall economy.
The economy which got off to a robust start last year since the end of lockdowns in May is now transitioning from the recovery phase to a growth phase, as the consumer who was a notable absentee in the overall economic recovery story has finally returned in a big way in the first quarter of this year powering the growth.
In March, the Central Bank projected a burst of economic activity in the economy with both business and consumer confidence reaching to their highest levels in a year.
Meanwhile, the government projected the economy to have grown by 3.6 percent in the first quarter of 2021. And the Central Bank maintains its 5.5 to 6.0 percent growth target for the year.