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Saturday, December 3, 2022

India’s neighbourhood country’s facing economic crisis

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On their own land, our neighbours are fighting in a conflict. In the face of Covid-19 and a failing economy. A look at the happenings in our padosi desh.

In India’s neighbourhood, things aren’t looking good. Pakistan recently appointed a new prime minister. For the first time since independence, Sri Lanka is on the edge of defaulting on its foreign debt. Nepal’s central bank chief has been suspended as the country faces economic uncertainty. And there are fears that further Covid-19 limitations would shake China’s economy, which has survived the pandemic’s previous waves.

There is a crisis forming in India’s neighbourhood, and while the causes are numerous, the economy and the Covid-19 pandemic are two strands that run through all countries. Here’s a quick look of what’s going on in the economies of some of India’s closest neighbours.

PAKISTAN

Pakistan is in the midst of neck-deep debt and high inflation with unemployment numbers hitting a record. During his campaign, Imran Khan focussed on the anti-corruption plank and his campaign struck a chord with the masses. He faced a no confidence motion that he lost and Pakistan got yet another prime minister — Nawaz Sharif’s brother Shehbaz Sharif. The swashbuckling former cricketer promised to tackle tackling the economic crisis on a war footing.

SRILANKA

Sri Lanka is facing its worst economic crisis since independence in 1948 and is on the brink of its first debt default. The crisis in the island nation has spiralled into protest and violence on the streets and mass resignations of ministers. Sri Lankans are facing a shortage of basic items such as milk, rice, electricity and medicines.

NEPAL

India’s neighbour in the East is also facing economic turmoil.  Nepal Rastra Bank (NRB, the central bank) has suspended the governor and named his deputy as interim chief. Like Sri Lanka, Nepal’s foreign reserves have been hit by a slump in tourism in Asia during the pandemic. The Himalayan country is heavily dependent on tourism and the export of limited commodities to meet its import expenditure.

CHINA

Currently, 23 Chinese cities have implemented either full or partial lockdowns. The European Union Chamber of Commerce in China has said that the current strategy is resulting in growing difficulties in transporting goods across provinces and through ports. This would likely impact China’s ability to export, which could eventually stoke inflation.

What about India?

India’s forex reserves slid by $11.173 billion to $606.475 billion in March, according to Reserve Bank of India (RBI) data. Previous worst weekly fall was of $9.6 billion for the week ended on March 11. RBI governor Shaktikanta Das has stated that the economic activity was barely above pre-pandemic levels but continues to recover.

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