How Sri Lanka's Economic Collapse Raises Alarm Bells For Other Emerging Markets
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- เผยแพร่เมื่อ 20 พ.ค. 2024
- During the 2010s, Sri Lanka had one of the fastest-growing economies in Asia.
Things took a 180-degree turn at the end of the decade as the country's economy stumbled. In May 2022, the government defaulted on its debt for the first time in history.
As inflation continued to spiral out of control, with a massive shortage of food, fuel and medicine for the country's 22 million people, Sri Lankans took to the street, forcing the president, Gotabaya Rajapaksa, to resign and flee the country.
Even though Sri Lanka has a new president, Ranil Wickremesinghe, protests continue. Inflation has risen past 50% - and could hit 70% - making it harder for people to survive.
Many experts believe that Sri Lanka's story is a warning sign for emerging markets.
"Sri Lanka is facing its worst economic collapse in its modern history," said Sumudu W. Watugala, assistant professor of finance at the Kelley School of Business at Indiana University. "This is due to long-standing structural weaknesses exacerbated by a series of idiosyncratic shocks. Sri Lanka's crisis can be a warning sign to other developing nations because it's a classic emerging market crisis in many ways."
So what does Sri Lanka's economic crisis signal about similar economies and emerging markets? Watch the video to learn about more risks involved in emerging markets, how Sri Lanka's economy collapsed and the country's path forward.
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How Sri Lanka's Economic Collapse Raises Alarm Bells For Other Emerging Markets
The fertiliser story was definitely something to do with preserving foreign exchange. This abundantly became clear when their farmers started to import natural fertiliser from China but those shipments were rejected on suspicion of parasites which later were confirmed to be untrue in Singapore.
2:52 at least CNBC should explain why Sri Lanka's organic farming imploded.
The agrochemical ban caused rice production to drop 20 percent in the six months after it was implemented, causing a country that had been self-sufficient in rice production to spend $450 million on rice imports - much more than the $400 million that would’ve been saved by banning fertilizer imports.
So 20 % less rice production and they had to import 450M worth for just six months? So for 12 months 20% would be 900M and 100% therefore what, ten billion dollars worth of rice a year with a GDP of 80 billion? That seems weird
@@planckismus yeah I don't believe those figures too.
Also. the issue was not that they switched fertilisers. It was that they switched the fertilisers overnight and didn't bother to ensure that farmers knew how to modify their farming practices to work with the new fertilisers. Organic farming is a significantly different system that takes time to implement successfully.
They did not have money to import fertilizer so tried to go organic with advise from Vandana Shiva who talk about environment and flies first class.
This data is debatable.
It’s almost like ppl reach a breaking point with greed and corruption. When people reach their wits end change always happens
@MSD Group You see? Was it worth to abandon USA for China? China sends tanks against its own citizens who were cheated by banks and apparently is not able to save regimes like those on Sri Lanka and that in Venezuela.
@MSD Group I'm not for US. I'm just pointing that contrary to China, USA has never used tanks against it's own citizens and China is doing it right now. China uses tanks against people to protect banksters...
@MSD Group Still -Contrary to China, US Does not use tanks against its own citizens... Especially to defend banksters and political mafia that controls China....
@MSD Group LOL!!! US contrary to China do not use tanks against its people.
@MSD Group "pupils"? BTW, they do not use the guns they sale. They do not sale guns at all at civilian commercial market. US citizens have businesses that sell guns.
Dr. Martin Luther King Jr said it best: "Whatever affects one directly, affects all indirectly."
True
Don't listen to any leaders, they are all selfish
THE SHOULD NOT HAVE INVESTED IN RENEWABLES!!!!!!!! THEY SHOULD HAVE MADE NUCLEAR POWER PLANTS!!!!!! :D :D
@@kieranrollinson8750 They are literally decommissioning nuclear power plants because of some bs green nonsense.
The whole country is now paying the price for it
This might get worst before it gets any better. I wish all those badly effected Good luck.
The United Nations said that the earth actually produces a surplus of food globally. We must move the food where it’s needed or the people will relocate
@@feederx08 Truly. It's Good to point out what needs to be done BUT it would be Better if one can give the people/UN a plan on how it can be done.
Fortunately/Unfortunately for those who took the effort to understand war, money & nature from works like Sun Wu's Art of War, Adam Smith's Wealth of Nations & Carl Sagan's Visions of Humanity, s/he/they will realise there exist many who seek to profit from this crisis. This may explain why many elites/experts from states like US, China, EU, India, UK, Russia, AU, Brazil, etc. groups like IMF, WHO, UNP, RSF, ICC, WFP, TSB, POG, etc. & firms like Apple, Tencent, Samsung, Nestle, L'Oreal, Tata, Sony, Siemens, etc. are already making their moves in the cyber/shadow space-time.
@@feederx08 if we help Sri Lanka how will Zelensky fill his pockets then?
Good government requires most of all leaders who put the public good unquestionably above their own personal interests. Countries was poor “precisely because it has been ruled by a narrow elite that has organized society for their benefit at the expense of the vast mass of people.”
Totally. It's Good to point out the problem & state what Sri Lanaka needs BUT it would be Better if one can give the people at least a plan.
Fortunately/Unfortunately for those who took the effort to understand war, money & nature from works like Sun Wu's Art of War, Adam Smith's Wealth of Nations & Carl Sagan's Visions of Humanity, s/he/they will realise there exist many who seek to profit from this crisis. This may explain why many elites/experts from states like US, China, EU, India, UK, Russia, AU, Brazil, etc. groups like IMF, WHO, UNP, RSF, ICC, WFP, TSB, POG, etc. & firms like Apple, Tencent, Samsung, Nestle, L'Oreal, Tata, Sony, Siemens, etc. are already making their moves in the cyber/shadow space-time.
How the masses allow this yo happen
Too true all around the world 🌎
sounds like the uk everyday
America's the same, run by an elite for their own benefit and not accountable to the rest of the country. They write their own laws.
It collapsed in a very similar way to Suharto's government during the Asian economic crisis. No one minded the corruption and graft if money rolls in, and lets not forget that Sri Lanka experienced phenomenal growth before the Pandemic, of course it was growth based on unsustainable borrowing. A lot of poor investments, bad decisions and inflated growth.
Absolutely. It's Good to point out the problem plaguing Sri Lanka & Indonesia BUT it would be Better if one can give the people at least a plan.
Fortunately/Unfortunately for those who took the effort to understand war, money & nature from works like Sun Wu's Art of War, Adam Smith's Wealth of Nations & Carl Sagan's Visions of Humanity, s/he/they will realise there exist many who seek to profit from this crisis. This may explain why many elites/experts from states like US, China, EU, India, UK, Russia, AU, Brazil, etc. groups like IMF, WHO, UNP, RSF, ICC, WFP, TSB, POG, etc. & firms like Apple, Tencent, Samsung, Nestle, L'Oreal, Tata, Sony, Siemens, etc. are already making their moves in the cyber/shadow space-time.
@@hendrykurniawan2565 And who has come into power in Sri Lanka? Ranil Wickremesinghe who was the prime Minister, the same group of people who were in power, supposed to oversee and monitor overreach of the President's power. I hope they can turn it around and make meaningful change.
That's so true, until 2 years ago. Sri Lanka was portrayed as a model country. One that ended a decades long civil war (controversially), brought peace, had long sustained economic growth and the people were seeing the benefits (even if a lot was taken by the elites)
@@yongjianyi3556 So funnily enough their equivalent of B. J. Habibie it seems.
I'm scared that after the next 50 years there will be apologists and fakers who claimed that life during that era was abundant, rich, and peaceful.
Mostly is so wtf u talking about
Yeah I heard that a lot even so, my country were living with dictatorial government
now that reminds me of someone who is in the highest position now
Its only unique to your country
@@cobaltblue2756
are you from north korea? i'm amused you still can browse the internet if you're living in a dictatorial government.
I hope this gets sorted out for the peoples’ sake.
Whenever a man or a family rules for a long time, the country suffers although there are a very few exceptions!
*A man or a family or a party
Sri Lanka is mix of farming and tourism, I wouldn't say it's a emerging market. A country that's not diversified in their asset don't end up well when the hard time hit on the very things they need. People think Sri Lanka ends up with this problem due to corruption which is actually very false. Sure some people fled with millions but imagine if a specific state in the US failed how much do you think the politicians have in the banks when moving out? lol. the fact is every country is in heavy debt, the real problem with their economy is that it can't print a lot of money without inflation, so despite having sovereignty, they don't have control over their money, so they can't print. Imagine if a specific state in the US are strictly into agriculture products and tourism, how many times would this state failed had it been without govt funds provided through our endless printing? This is no different than blaming poor individual being poor because they make bad decision, heck everyone do at some points life but only some people continue to get bailed out through imaginary printing.
Economic collapse lead directly to social collapse.
Canadian citizens take notes 📝
You simply can't shut down economies. This is the greatest lesson here. Every single job is essential for any society to thrive.
Any idiot could have told us this....but the corrupt morons in power did it anyway
The problem of emerging market is that they stays on emerging no matter how much money poured in. Also their government is riddled with corruption and bribly which took advantage of foreign aid
Sri Lanka had the highest ESG score out of all the nations and look at what happened.
Cancer is great for capitalism!
Wow, and we complain about $5 gas.
truly a bruh moment
Even Bangladesh one of the most healthiest economy in south asia is now facing troubles, recent fuel hikes is the best example. India on other hand is safe
India is smart, stepped up buying lots of cheap crude oil, and coal from Russia. Indian stood its feet against US sanction pressures!
@@drewh3224 yeah ,indian government give its own interest top priority no matter how much pressure west puts on us.
India has the bargain power and can trade directly from Russia, Bangladesh can't do that since the west could place a sanctions immediately having said that unemployment in India could be brutal especially youth unemployment in coming future.Its too early to say that india is safe.
LoL! India is worst, both Sri Lanka and Bangladesh have higher income per capita and living standards than India!
What is happening to Sri Lanka, is situation normal in India.
@@papastalin1543 true
They grow the best tea in the world. I really hope the export will stabilize.
Sri Lankan rules were just dump simply saying irresponsible is an understatement
These are the fruits of srilanka’s crimes against humanity
This is the result of going after psudo reconciliation
Lord be with them thru hard times and everyone around the world going thru hunger or financial problems or sicknesses amen 🙏
It's more due to government corruption. Yes, the Chinese projects also have a major role to play, but government officials and powerful families stealing/siphoning funds, taking kickbacks, and giving government contracts to their friends and family despite not being able to do the work are the main reasons why this is happening. The same thing has been happening in Trinidad & Tobago, my home country, for decades. Unfortunately, we will be here within a decade or two.
China likes working with governments that don't exercise accountability to their citizens.
@@SL420- lol true but so does USA
Never blame the west. China only is only 10%of their debts
@@romeo1650 If you buy credits from China, it's not Chinese fault. How can you blame a bank if you can't pay the debt?
Chinese debt is only 10% of Sri Lanka's debt, many other nations has bigger debt. US propaganda demonizing China is the problem.
Nice cover.
I hope everything gonna be okay. There. 🥰🥰
Dependence on one Industry is Dangerous.
and that too Tourism which is very volatile... Bangladesh has textile industry and people wear clothes/shoes almost everyday
Tourism is very sensitive. Glad Bangladesh doesn't have tourism
Wtf. This video is a few weeks late.
Yes you are right.
My thoughts exactly.
6:36 @CNBC your subtitles guy missed "Peru" (left it as "parallel")
ANC needs to watch this
The ban on chemical fertilizers is something for all of us to learn from. Most green policy will contribute to a massive Malthusian nightmare for the world. People need food.
I agree but they do it under the guys of “ saving the planet “ Which sounds good to the average person who’s is uninformed
Lol, way to take the worst possible example of something and use it to build a strawman argument. Aside from the fact that this was never implemented out of a desire to be more green, the simple fact is that you can't just switch one fertiliser for another and then keep farming as you normally do. You need to make changes to the way that you farm to suit the different conditions. Farmers that turn to organic farming practices usually do so gradually over a period of time to avoid this kind of circumstance. The fact is any poorly planned or recklessly instituted change will result in this kind of problem.
When properly implemented organic farming practices that minimise or eliminate chemical fertilisers have been shown to increase crop yields while reducing environmental damage. This isn't some delusional green conspiracy, it's an attempt to improve farming practices.
@@EfHaichDee it sounds like you and the OP are saying the same thing!
@@lmlmlmlm7627 I'm saying the diametric opposite of what he's saying.
He's saying the problem was the use of organic fertilisers. I'm saying the problem is mismanagement and poor planning.
No seriously though, can you read?
Like how California plans to ban selling of gas cars but doesn't have the infrastructure to support the energy required to power homes and all other green energy use.
IMF and its debt trap is the biggest problem after corruption.
So what is ur solution then, we're will the government get the money from?
@@kenechukwuokonkwo3061 Learn from Seretse Khama Former President of Botswana.
That’s why a multipolar global economy is much better. Give options to emerging economies.
Also it is also how people decide whom to vote to manage the country.
Shows that the power of the people is stronger than the people in power.
Another thing is that people just don't pay taxes in those nations. If those same protestors paid their fair share then this crisis would have been lessened. It would have allowed some wiggle room for the government, and would have prevented the high interest loans that Sri Lanka now has.
New government has introduced a QR code system to manage the oil distribution. Actually now the oil problem has solved.now the oil queue is not long.I think that the things will normal soon.
Thank you for the feedback. Good news usually lags weeks and months since they don't "sell" as well as bad news.
It won't normalise just yet as forex is still a major problem and the govt is still borrowing money for fuel purchase. Until the govt slashes state sector expenditure this crisis will get worse down the line.
@@DaranKandasamy Slashing state sector expenditure will save us Rupees and it doesnt do much to help forex issue.
@@starrynight43451 It's one of the many conditions of the IMF. Slashing state expenditure does indirectly help with the forex issue (ie. import of raw materials for construction, overseas travel and accommodation etc). The govt admitted today that Gotabhaya's travel after being ousted is being funded by public funds (ie. dollars the country does not have).
hang in there love from Australia
Although Sri Lankan citizens may have taken back overall "control" over their land and economy... it may be beyond repair. 😕
Just like Venezuela
Fools always wake up when it's too late, remember who you voted for
@@robzonefire So ... the Yanks steal Monomeros & Citgo, and the Brits steal the gold reserves and somehow you think that Venezuela is "beyond repair"? The Yanks are so afraid of progressive policies improving the lives of people that they invariably apply draconian economic sanctions in the name of "democracy" to anybody that doesn't follow their lead (and lick their boots). They are just afraid of the impact those countries would have on "empire". You must be a venezuelan "Rajapaksa"
The economy still managed by the same old govenment. Only president and prime minister and cabinet minister positions had changed and now they are replaced by the friends of the same party. Only the faces has changed, it's the same people. They still have the majority of the parliment and still rules the nation as the way they please. Only an election can change this situation.
Not if they're smart. 😅
Happening in front of all but still difficult to get head or tail of it. They are not rich but they are not really poor poor. Where is all their money really- who will solve crony capitalism.
E.S.G & WORLD ECONOMIC REFORM period
Thanks a lot chiina
ignorant comment
A warning sign for the entire world!
GOOD
This is why an alternative to the dollar needs to be established
There already are two....gold and silver.
The US won't let it happen, Iraq started looking to offload their dollars for Euros at the end of 2002 and within a few months the US was bombing them into the stone age, the real reason why no one in the Eurozone supported the coalition.
@@krashd What about the UK? They supported the invasion.
Yeah, just blame the US dollar.
Our near future...
All generations who loss their roots anywhere in the world are bound to go through these tormenting moments... countries considered weaker to Sri Lanka 🇱🇰 ( eg Mauritius, Malaysia, Maldives, Singapore, Seychelles) are doing better economically, I don't think the countries I taken as example were immune by Covid-19... Sri lankan brothers, my humble appeal to you, Recognise and Honor your ancestors like we do. They will protect you ahead. Pray 🙏 brothers pray to your ancestors 🙏 ❤️
The music is disturbing, otherwise a good summary
This was pure fluff. Please generate substantial content
I know saving the environment is important but I think switching off nuclear power plants in Europe was a dumb move. Renewables are still not ready to become base load generation just yet. The transition has to be gradual not dramatic. Same thing happened with fertilizer issue in Sri Lanka.
Nuclear is the best green energy modern society can afford
Two very different topics. It only muddies the waters to compare the two.
How? Four words: World Economic Forum Experiment
How ‘bout the belt and road initiative, ChiNaBC?
What's the future of Sri Lanka? & What's the point of protest? Why these people are wasting their time & even energy on something that doesn't matter?
Same question, i mean these people are responsible for their misery . They were enjoying the freebies provided by government and electing according to that ,this was inevitable. The economic model was bad from the very beginning.
Watch Sri Lanka’s killing fields
@@papastalin1543 tell me more , what gifts from government ? (I'm a swiss)
@SorryLankan are you Sri Lankan hindu ?
@SorryLankan racist ???
Give our stolen money back they shout. Sri Lankans have been living it large on the countries borrowings. The last several years of prosperity has been a mirage.
No bailouts for banks and other creditors.
The Rajabaksa Brothers should be blamed for completely bringing Sri Lankan economy to its knees. The devastating Punch came when they accepted loan offer from the CCP for infrastructure development on unacceptable terms when it was not the need of the hour for them. The strings attached with the CCP loans favoured the loaner immensely even if the lavish projects failed.
Well while I agree on some point the citizens voted for it.
@@sagepirotess6312 If so, then why self-destruct?, the protests should be directed towards the Chinese.
@@invader8867 I dont disagree to a point. I live in Asia and have followed china 1 belt for years. But many countries doing it sadly. Look as t Australia.
@SorryLankan I visited it a few years ago. Glad I did before this all went down.
All SL data are open for you to see : th-cam.com/video/U52tT5hgtSk/w-d-xo.html China saved US ass in 2008 th-cam.com/video/9tJatdtv4jQ/w-d-xo.html and this time don't ask Chinese buy your T bonds but we will sell them all not even god can help you !
Time to review whether democracy policy (elected based on votes, popularity and favourism) is way forward.....
After the end of war in 2009, Mahinda Rajapaksa ruled SL for 5 years. That is from 2009 - 2014. Then Ranil Wickremesinghe - Maithreepala Sirisena ruled for another 5 years, from 2015 - 2019. So it is incorrect to say Mahinda Rajapaksa dominated every department in the government.
Gets rib of dollar peg, problem solve?
Thing is don't loan money we never have this in first place
Why am I looking at a TV inside of the video? Pompous affectation
oh boy.
It looks nearly as violent as January 6
When your best friend is China:
how cnbc will make asia like this
So what policy changes is Sri Lanka making to address the situation?
Shave half a percent off interest rates, shore up the rupee, keep VAT steady for now, and round up all the dwarves.
Green new deal worked. I wonder if this will be censored.
China may not be biggest lender but only one lender who took advantage on the Srilanka's inability to repay load and took Humbanthota port for 99 years of lease and now building new city from sea reclaimed land and will see how it will gonna turn out.
Do more home work... The port was not defaulted. The sl govt come to china when they realized they were not able to run it and make it profitable and They're making offer to China. one of the Chinese companies paid 1.3 billion dollars to get the license to run it. It it really really stupid that people make it sound like the collapse of the country was because Chinese was running one of its ports
Fools keep voting for crooks, i don't care family, relatives, tribe or race, I vote for policies&integrity
It went down because of super high inflation. Hmmm I wonder what other country right now is causing major high unnecessary inflation....
Inflation is the result of collapse in confidence in the government.
Biden...u rNext!
BANNING THINGS BEFORE YOU HAVE PUT OTHER THINGS IN PLACE AND WORKING IS TOTALY WRONG
only Indonesia and india economy will resist from recession this year - World bank and IMF
Indonesia has 4 Percentage chances to get into recession
@@Lakshya12 it's small compare to another country because gets benefit from High commodity price
I'm getting sick of the IMF. How many times are these countries going to be bailed out? Maybe if countries experience real pain on not being bailed out they wouldn't be so reckless. This happens all the time with Argentina too. I know the people are hurting but they'll just keep hurting and getting stuck in these situations without some real pain being felt.
True! IMF should let Pakistan (sponsorer of terrorism) starve to death
Good thing Nicki Minaj is the Queen of Rap
No one listens rap
This seems to be another era of a country whose leader is being tumbling down as seen with the Iraqi leader Saddam Hussein.
Totally different. Sri Lanka didnt invade other countries like Saddam.
@@tubester4567 I am not sure about that man
How Sri Lanka’s economic crises rings alarm bells
Before you take a loan from the bank make sure you can re pay . Or at least make sure you buy a assets not liabilities..Sri Lanka went in to debit crisis coz poor management by the government.lot of liabilities for show off ..Now people has to pay for this Rajapksha’ show off ..!
it's always corruption... tsk tsk tsk
Dollar system is not servival now this time .
That what happens, when government mess with the market. Atlas Shrugged dystopia in real life.
Common result of socialist economic policy
sri lanka deserve this
Why hasn't Sri lanka gone into an election to pick the next head of state?? And why isn't there an interm set up?? So sad to see the spill over.. Newton's law is always at play.. also I think Japan is also a huge lender that went unnoticed
All world governments need to provide food, financial and political aid of the people of Sri Lanka -- to save the people from destroying themselves Needlessly -- instead of playing a game of Chess and Monopoly for the ownership of colonies and natural resources -- Or the world will fall, one country at a time.
Would be so much easier if Russia wouldn't had started war with Ukraine. Global balance of food had shrunk tremendously because of Putin's imperialistic plans.
@@robertgworek2497 This is true.
It would have been great if the American government had not installed puppet governments in Latin America and ruined their countries so that they came to America.
@@6catalina0 To be honest I don't think so that US has to do anything to ruin Latin America countries. Latin American societies and political classes do it very effectively and US really can just sit and watch.
@@robertgworek2497 This has happened as well.
No the world should give $5 Trillion Aid to Ukraine so that Zelensky could line up his pockets
Search Sri Lanka now and the earliest video is this one 2 weeks old as of 8/28/2022. How about a current update every day! The world wants to know how bad it is over there! It must be total pandemonium by now! People starving to death!? What is going on!? The world wants to know!!!
Looks like something from the science-fiction doomsday film or a repeat of 2008
Philippines is waving..
lmao srilanka had dutch disease but with tourism sector. I get it.
Nations that sign economic deals with China will have the same fate.
Sri Lanka's collapse it's a alarm 🚨 bell for the humanity, world farmers all around the world.
Nothing wrong with a little Jan 6 in my lanka
Took on too much debt to please the electorate and in an insane effort to go green? Sounds familiar!
it was the staring frogs
The same family has been in power forever and this is what happened.
The real reason for this Sri Lankan and Pakistani economic crisis is Chinese debt trap. These countries have taken debt from Chinese government for unviable projects and then have been taking more debt to service this debt. Other nations should learn from this mistake and avoid Chinese debt.
China is going to devour pakistan to pursue it's global domination and hard working people of Pakistan are the real victims of China's malevolency.
@samiitb you either didn't see the report in full or are simply a shameless person. The graph clearly showed that China's share of Sri Lanka's debt is only 10% of the total. You should probably concentrate on the 47% that the graph labels "Market Borrowing". That is what causes the spiraling debt trap for most developing countries. That is the share that belongs to the "vulture funds" which will pursue payment even in times of famine.
@Nonsense User I can't wait to see @samiitb explain his debt trap theory to us. He is hoping that somehow repeating lies will become truth. I think his brain is in a "western misinformation trap" 🤣🤣🤣
What other Developing nations are on the brink of collapse.
Many, unfortunately.
Pakistan hopefully
The family responsible for this (Rajapaksas) fled with millions of dollars hidden away.
Of course they did. And there's no J.C. Denton nor Helios to save them all.
What a shame.
@@Novastar.SaberCombat This is the truth.
Same kind of corruption here in America.
An entire family members rule the country.
Usa china russia europe latin america if they continue just for the 1 % it will end badly
Cnbc make this video on indian influence