How Sri Lanka's economic collapse raises alarm bells for other emerging markets

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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Sri Lanka's ousted president seeks temporary stay in Thailand

Fast News

Foreign Minister Don Pramudwinai says the current Sri Lankan government supported Gotabaya Rajapaksa's trip to Thailand, adding that the former president's diplomatic passport would allow him to stay for 90 days.

Prayuth also said Rajapaksa could not participate in any political activities while in Thailand. (AP)

Sri Lanka's former president, Gotabaya Rajapaksa, is expected to arrive in Thailand and stay temporarily in a second Southeast Asian country since fleeing his island nation last month in the midst of mass protests.

The former military officer, who is the first Sri Lankan head of state to quit mid-term, is expected to travel from Singapore to Thailand's capital of Bangkok on Thursday, two sources said. 

Thai authorities said Rajapaksa had no intention of seeking political asylum and would only stay temporarily.

"This is a humanitarian issue and there is an agreement that it's a temporary stay," Prime Minister Prayuth Chan-ocha told reporters on Wednesday.

Prayuth also said Rajapaksa could not participate in any political activities while in Thailand.

Foreign Minister Don Pramudwinai said the current Sri Lankan government supported Rajapaksa's trip to Thailand, adding that the former president's diplomatic passport would allow him to stay for 90 days.

Rajapaksa has made no public appearances or comment since leaving Sri Lanka.

Rajapaksa fled to Singapore on July 14 and resigned from office shortly afterward, following unprecedented unrest over his government's handling of the worst economic crisis in seven decades, and days after thousands of protesters stormed the president's official residence and office.

Sri Lanka's economic crisis is a result of several factors, including Covid-19, which battered its tourism-reliant economy and slashed remittances from workers overseas, rising oil prices, populist tax cuts and a seven-month ban on the import of chemical fertilisers last year that devastated agriculture.

READ MORE: Sri Lanka to restart IMF bailout talks amid economic crisis

[embed]https://www.youtube.com/watch?v=mMOrZuAlTbY[/embed]

Source: Reuters

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Sri Lanka's Wanindu Hasaranga denied NOC to play in the Hundred, forced to pull out of £100,000 contract

Wanindu Hasaranga has been denied a No-Objection Certificate (NOC) to play in the Hundred by Sri Lanka Cricket (SLC) and has been forced to pull out of his £100,000 contract with Manchester Originals as a result.

Ashley de Silva, SLC's chief executive, told ESPNcricinfo that the board turned down his request because they want him to be physically and mentally fresh ahead of the Asia Cup, which starts on August 27, and the T20 World Cup in Australia later this year.

Originals had previously expected Hasaranga to miss the Hundred due to a clash with the Lanka Premier League, before that tournament was postponed. They will have the option to retain him for the 2023 season if they can agree a contract with him.

ESPNcricinfo understands Tristan Stubbs, the middle-order batter who hit 72 off 28 balls in the first T20l against England last week, has been signed as a replacement and will link up with Originals after South Africa's second T20I against Ireland on Friday.

Originals play their first game of the 2022 season against Northern Superchargers at Emirates Old Trafford on Friday night and are likely to fill their three overseas slots with Andre Russell, Ashton Turner and Sean Abbott. Turner is expected to drop out of the XI when Stubbs is available and then return to the side when Russell leaves for the CPL, which starts on September 1.

Elsewhere, Welsh Fire confirmed on Thursday that Naseem Shah has withdrawn from the tournament after his selection for Pakistan's tour to the Netherlands and the Asia Cup. Naseem did not play in Fire's defeat to Southern Brave on the opening night and will not link up with the squad. They are yet to announce a replacement.

Birmingham Phoenix have brought in Brett D'Oliveira, the Worcestershire allrounder, and Timm van der Gugten, the Glamorgan seamer, as injury replacements for Tom Abell and Olly Stone respectively. "We're delighted to add two experienced players to the Phoenix men's squad," Craig Flindall, their general manager, said.

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