‘Stay-at-home economy’ surges at expense of in-person services economy

„Construction sector contracted 13% while textile and apparel shrunk 12% in 2020

Many sectors took a severe battering in the pandemic year, but a few such as telecommunication, IT programming and consultancy, tele-health, broadcasting services, financial services and wholesale and retail trade received a sudden boost from the new conditions, making up for a significant share of the lost output due to the pandemic.

Such sectors together referred to as ‘stay-at-home economy’ did remarkably well in 2020 re-calibrating the economy from a man-to-man set-up to a man-tomachine set-up, while also reshaping the human interactions, which will have lingering effects, perhaps irreversible.

For instance the data showed that the telecommunication sector recording a growth of 15.4 percent, the highest in its history followed by financial service activities and its auxiliary services, and the activities captured under IT programming and consultancy services with 10.9 percent and 10.0 percent growths in 2020.

“Telecommunication; one of the subservices in services, has recorded the highest growth rate among all the sub activities in the GDP in the year 2020,” said the Department of Census and Statistics in their more granular analysis of the economic output in 2020.

Meanwhile, the sectors which are more prone to the virus such as accommodation, food and beverage services contracted by as much as 39.4 percent followed by passenger transport, personal service activities and professional services declining by 6.7 percent, 6.5 percent and 2.7 percent respectively.

Services sector was the hardest hit from the pandemic and its tainted aftermath as mask mandates, social distancing and self isolations made services requiring personal contact extremely difficult or impossible.

Sri Lankan economy managed to arrest its contraction to just 3.6 percent in 2020 due to quick rebound staged during the third quarter by recording a growth of 1.3 percent which sustained during the fourth, despite restrictions being re-imposed, albeit at a less intense level.

This was made possible by the robust performance in the stay-at-home sectors which in fact powered many other activities such as teleworking, telehealth, entertainment, education and others which otherwise would have to be carried out with in-person presence.

However, doubts remain if technology and digitalisation can be a life-long replacement for the things that carried out with more personal contact and human touch.

Meanwhile, the construction sector ended up contracting 13.2 percent in 2020 despite the quick return to normalcy since June as sites found extremely difficult to find people who left for their hometown while some of the private sector projects were either cancelled or deferred for financial reasons.

The sector which shrank by 30 percent in the second quarter recovered in the third quarter resulting only in 9 percent contraction before returning to a fourth quarter growth of 1.2 percent.

Meanwhile manufacturing of textiles and wearing apparels, the country’s largest export commodity contracted by 11.9 percent in 2020 due to less demand from key markets such as the United States and the Europe.