Asia has turned out to be a hotspot for the pandemic to regroup. Unfortunately, the frontier economies have faced the repercussions of disruption: a tad bit more than their emerging counterparts. In recent months, the badly battered economy of Sri Lanka has emerged as a prime example of how the pandemic has crippled the economic mechanism to the extent of paralysis. And while endemic inflation and external imbalances are a commonality in the developing economies today, Sri Lanka is facing a fatal blend of fiscal mismanagement, economic incompetency alongside excruciating debt obligations; all that is leading the country on the precipice of bankruptcy.
The South Asian island nation is currently under an extended lockdown due to mounting hospitalizations and deaths related to the recent outbreak of the delta variant. Amid a health crisis, Sri Lanka is beleaguered by the economic downturn which is tightening the noose around the country’s fragile monetary mechanism. Sri Lanka’s forex reserves have dwindled significantly in the past few months. As of July, the foreign exchange reserves have dropped down from the highs of around $7.5 billion (back in 2019) to a dismal level of $2.8 billion. The drying reserves could be fundamentally attributed to the debt repayment schedule. Colombo recently registered an outflow of $1 billion on account of the international debt payment. The remaining reserves barely provide an import cover of 1.8 months: massively falling short of the minimum desired three-month mark. Thus, Sri Lanka’s credit default premium has climbed through the roof as the country wades through a blinding shortage of foreign currency to meet even basic requirements.
“The economic turmoil has been further compounded by the colossal drop in revenue and remittances,” said Finance Minister Basil Rajapaksa. The issue at the forefront is the worsening health crisis and the subsequent restrictions that have all but wrecked the key industries of Sri Lanka: Travel and Tourism. Tourism contributes roughly 12% of the Sri Lankan GDP and congregates an approximate share of 5% of the $81 billion economy. The sector stands as the most lucrative industry in Sri Lanka. However, the tide has been harsh against recovery. Over the past few months, the revenue from tourism has fallen, from more than $450 million a month two years ago, down to $2 million a month, according to the data from Trading Economics. Such a steep downfall has resulted in further deterioration of the forex reserves that are already at their lowest level since 2009.
Despite receiving concessionary funds from both the World Bank and the Asian Development Bank, the Sri Lankan economy seems to be spiraling towards an impending downfall. The apparent reason is the extreme inflationary pressure which is weighing heavily: especially on food essentials. According to data acquired from leading economists, the Colombo Consumer Price Inflation has bloated at 5.7% year-on-year. As a result, the Sri Lankan rupee has increasingly depreciated by more than 8% this year. A combination of high inflation and massive devaluation has all but punctured the balance of payment. As Sri Lanka imports the majority of its food supplies, it is only straightforward to connect the dots: the more the inflation prevails, the faster the rupee would depreciate, and thus, the more expensive the food items would turn out to be.
To make matters worse, the Sri Lankan government has facilitated a food crisis by barring the use of chemical fertilizers to achieve 100% organic agricultural production. With expensive imports and throttling domestic regulations, the Rajapaksa regime has created a deliberate shortage of even the most basic food items like sugar. Instead of acknowledging the faulty policy, the Sri Lankan government has ventured through to declare an economic emergency: passing the baton to the army to ensure adequate supply at a fair price. Moreover, price caps have further pushed against the supply chain since traders are engaging in black markets instead of selling at a loss. The Rajapaksa regime has been befuddled by the fissures in the economy and has since started playing the Blame game.
While refusing to end its aggressive policy of organic farming, the government has blamed speculators and hoarders for the surging food inflation. Naturally, the supposed corrective policies did nothing to resolve the underlying problem. The Central Bank of Sri Lanka (CBSL) recently implemented restrictions in the forex market to disarm the alleged speculators from further plunging the rupee. The CBSL limited spot trading of rupee to a maximum of 200 rupees to a US dollar. Furthermore, CBSL also banned traders from entering forward contracts in the currency market to control the volatility of the rupee. However, the strategy has so far backfired. The inability of traders to get more US dollars has resulted in a fall of imports of even the basic food essentials and necessities. Moreover, the ban on forward contracts in the forex market has made it difficult for traders to mitigate the risk of currency volatility. As a result, foreign trade has ceased to exist in some industries while a growing demand is all but exacerbating inflationary pressure in the domestic economy.
To dampen the demand pressure, Sri Lanka adopted a hawkish shift in a desperate attempt to reach equilibrium and harness inflation. Recently, Sri Lanka became the first Asian country to raise its policy rates since the pandemic. The CBSL hiked the interest rates by 50 basis points while also increasing the Statutory Reserve Ratio by 200 basis points. The CBSL officials claimed that the rate hike was scheduled to “mitigate pressure on the currency and preempt the buildup of excessive inflationary pressures.” However, the reasoning was based on a faulty groundwork assuming that the dwindling forex reserves are due to excessive borrowing and import of exotic goods: which is simply ludicrous. As already discussed, high imports are basically comprised of food essentials which are turning more and more expensive due to excessively devalued rupee along with extreme food inflation in the domestic market. The real causes of depletion are the crippling debt obligations, mounting inflationary pressures, massive devaluation of the rupee, and inane agricultural policies. Therefore, the hike in interest rates is only making it harder for domestic traders to meet their margins while the shortage is only expanding with time as the supply struggles to keep up.
Sri Lanka stands at a high risk of bankruptcy, especially since the S&P Global Ratings has recently slashed the country’s credit outlook to negative. The change in ratings along with significantly low forex reserves and a nosediving rupee, all have jointly contributed to the doubts prevailing regarding Sri Lanka’s ability to service its $1.5 billion debt that matures in 2022. To make matters worse, the CBSL Governor Weligamage Don Lakshman recently announced his abrupt resignation from the office. Amid such uncertainty and economic disparity, the Rajapaksa regime is still dabbling in options instead of resolving the problems head-on. The president himself asserted that the country’s policy is to “borrow without any conditions harming the country’s independence and sovereignty.” However, ironically his aspirations are at a dead end as Sri Lanka is rapidly falling short of survival. In the end, the only option left would be to turn to the IMF for aid: where the regime would be forced to choose between survival or independence – reforms or bankruptcy in simpler terms.
An Uneven Recovery: the Impact of COVID-19 on Latin America and the Caribbean
Employment rates in some Latin American and Caribbean countries have experienced a relative recovery, although in most, rates fall short of pre-pandemic levels. The quality of available jobs has also declined, as has the number of hours of paid work per week, according to data from a new survey by the World Bank and the United Nations Development Program (UNDP).
The High-frequency Phone Surveys, the second phase of which was implemented this year in 24 countries of the region, provides a snapshot of families’ well-being and their perceptions regarding the crisis. The goal is to take the pulse of the region and measure the impacts of the pandemic in key areas such as the labor market, income and food security, gender equality, and household access to basic services, such as education, health (including the COVID-19 vaccine), Internet connectivity and digital finance. The survey took a representative sample of the population aged 18 and over with access to a telephone in each country.
“The COVID-19 pandemic underscored the pre-existing inequalities in the region, where the most vulnerable and poorest groups have been disproportionately affected,” said Luis Felipe López-Calva, UNDP Regional Director for Latin America and the Caribbean. “This survey allows us to take the pulse of the region and propose evidence-based solutions.”
“The pandemic severely impacted millions of families in the region,” said Carlos Felipe Jaramillo, World Bank Vice-president for Latin America and the Caribbean. “These surveys we present today are crucial for obtaining current data on the scope of the crisis and for recommending informed measures to help improve the quality of life in our countries.”
Survey results demonstrate that the crisis particularly affected women, both because of the stronger initial impact on them and their slower labor market recovery. Mothers of young children (aged 0 to 5 years) have been most affected. In fact, a year and a half after the onset of the crisis, women are twice as likely as men to be unemployed owing to the pandemic. This situation is exacerbated by an increase in women’s household responsibilities, including supervision of children in remote education, and a higher incidence of mental health problems.
For the region as a whole, the employment rate stood at around 62 percent, almost 11 percentage points below the pre-pandemic level. Employment rates surpassed pre-crisis levels only in Guatemala, Nicaragua and El Salvador.
Moreover, formal employment fell 5.3 percent in the region while self-employment grew 5.7 percent, and the proportion of workers employed in small businesses (maximum of four workers) increased by 8 percent. These figures point to a deterioration in the quality of available employment. Even among the employed population, regional survey results identified a decrease in weekly hours of paid work, from 43 to 37, confirming this negative trend.
The survey data found that 28 percent of people employed before the pandemic lost their jobs, and more than half (17 percent) of those with a job before the pandemic have left the labor force. These impacts disproportionately affected women with young children: 40 percent of female workers over 18 with children aged 0 to 5 years lost their pre-pandemic job, compared to 39 percent of women in general and 18 percent of men.
The pandemic had a greater impact on less educated workers (both men and women). Thirty-five percent of those with a primary education or less lost their job during the pandemic, as did 28 percent of employees with a secondary education. Approximately 19 percent of individuals with a tertiary education became unemployed.
Survey data revealed that as a consequence of labor market setbacks, just over half of the households in the region have not yet managed to recover their pre-pandemic income levels. This situation occurred despite government efforts to help families through direct transfer programs and other benefits. Approximately 38 percent of survey respondents had received emergency cash transfers.
The survey demonstrated that food insecurity still affects 23.9 percent of households in Latin America and the Caribbean. This figure is almost double that reported by households prior to the pandemic — 12.8 percent. However, most countries have improved in this area with respect to the levels observed in June 2020.
Results also demonstrated that more than a year after the onset of the crisis, 86 percent of school-age children and youth receive some type of education (face-to-face or remote). However, figures vary widely across countries: in Guyana and Guatemala, it is 64 percent while in Peru and Chile, it reaches 95 and 97 percent, respectively. Additionally, education coverage falls below pre-pandemic levels in the countries surveyed. Just under a quarter of students in the region attended face-to-face classes.
Access to health services improved significantly. However, the percentage of unvaccinated people remains high in some countries. Eight percent of the regional population has not been vaccinated or is not willing to receive a vaccine. This percentage is especially high in the Caribbean: 60 percent in Haiti, 49 percent in Jamaica and 43 percent in Saint Lucia and Dominica.
Finally, according to the survey results, the use of mobile banking and online transactions (e-commerce) rose sharply during the pandemic. The use of digital payments also increased — currently, 26 percent of survey respondents said they used mobile wallets. The highest increases were among the rural population, the population over age 55 and those with low levels of education (primary or less).
Gender-based violence in Bangladesh: Economic Implications
Violence against women is one of the most heinous crimes perpetrated in today’s world. However, despite the gravity of the violence perpetrated against women, it is still the pervading reality in the world. Bangladesh is also afflicted with this malaise of violence against women which is manifested in the deluge of news across the media about the violence against women in various form .While Bangladesh has made commendable strides in the economic front, the perennial subjugation of the women who account for virtually half of its population remains a hurdle. Against this backdrop, this article investigates the economic toll incurred to the economy owing to the entrenched culture of systemic violence in our country.
Women constitute nearly half of the population of Bangladesh. As such, their innate potentials have considerable bearing on the socio-economic progress of the country. Admittedly, advancement of a country in socio-cultural indicators presupposes the simultaneous improvement of women from the subjugated position culturally attributed to them. It is impossible to envisage a prosperous thriving economy without the contribution and participation of the women equally. Therefore, the lack of women’s participation commensurate with their capabilities hinders the development of the country.
One of the obstacles women confront in their journey of transforming into human capital is perhaps the retrograde views that society harbor about the traditional gender role of the women which fetter their contribution to the economy and society by bestowing them only the circumscribed role of looking after the domestic affairs and rearing and educating child. The pastoral as well as urban culture perpetuate these traditional gender roles and deny women a free rein over their fate. Whenever women disavow the preordained and predictable roles provided by the society, they have to face mounting pressure from society so as to conform to the prevailing norms .Failing to conform to the regressive gender role will spell grave consequences for the women .When the society fails to cower the woman with the threats that are at its disposal ,it resort to the egregious path of violence. While violence against women is one of the most reprehensible crime one can ever commit, it however is normalized through a power dynamics that reinforces the overbearing male role and relegate women to the subjugation. Therefore, the culture of violence against women isn’t anomalous rather is embedded in the prevailing patriarchal power dynamics which deem chastising women for their rebellious attitude is solicited and invoke often contrived and distorted religious edicts in order to legitimize their deplorable crime. Moreover, the culture of violence against women which has been aptly termed as a epidemic by the United Nations is rooted in the prevailing socio-economic structure of the country that systematically condone the browbeating of women into submission to patriarchal norms and wield violent measures when the woman stubbornly gainsay their patriarchal hegemony.
While the social, cultural and health toll of the violence perpetrated against women is undoubtedly strenuous, the economic losses incurred by the violence and the opportunities nipped in the bud owing to violence against women also need to be taken into account in order to the adequately discern the deleterious ramifications of the violence against women .However, despite profound economic toll that are inflicted due to the violence against women, it is still unaddressed in the economic literature worldwide and discussion and cognizance about this momentous issue and its economic implications still scant.
As has been mentioned earlier, women constitute the lynchpin of the economy of Bangladesh which has been adequately manifested in the participation of women in Bangladesh’s much-heralded RMG sector and other productive sectors. However, this success of the economy overshadows the plight and perils this working class women confront in their bid to become economically productive. The violence against women is systemically entrenched in the country and women’s engagement in the economic activities are frowned upon by the society and culture .Therefore ,the this patriarchal fetter women behind the door of their houses and worst women are inflicted physical and mental violence in event of questioning the dictates of the elders and the male custodians. Therefore , the fundamental impact of violence against women on the economy of the country related to the untapped opportunities due to the constrains imposed by the patriarchal society on women under the pretext of social, religious and cultural norm. This threat alone or normalization of the gender role of the women as a care-giver hinder women in taking part in the economy on a par with their male counterparts .
Beside the lost opportunities that can be tapped, the violence against women has numerous other implications on the economy. Firstly, the violence against women inevitably results in the physical damage and mental trauma of the victim which has enduring toll on her. Therefore ,violence against women translate to toll on the health of the victim and therefore the cost incurred on the victim due to medical fees as a result of the violence is also included in the economic cost of violence against women. Secondly, the violence against women also leads to diminished productivity of the victim due to the health hazards. Therefore, violence against women has implicit economic cost on the economy as a result of the lost productivity.
Thirdly,the cycle of the violence against women negatively sensitize women in not challenging the sacrosanct patriarchal norms and therefore women fit themselves with the prevailing adverse society and they themselves reproduce and reinforce these norms .Therefore, a vicious cycle set in which prevents women to actualize their potential and stymie them in their path of realizing their goal .This result a sense of apathy in women with regards to education and other means of social mobility and they deliberately avoid the economically productive activities that are deemed taboo by the prevailing social norms and cultural ethos.
Moreover, violence against women is an egregious form of crime perpetrated by a patriarchal agent while the society has entrenched roles, norms and ethos that condone and encourage such outrageous violence .Moreover, a vicious cycle is at play in the gender based violence. The economic repercussions of the violence committed against women is considerable. Violence against women hinder the development of the women commensurate with their inherent potential which nip the dreams of women in the bud. Besides, gender based violence also deter women in challenging the prevailing patriarchal norms and undertaking productive economic activities that are frowned by the patriarchal society and are deemed taboo. Moreover, a widespread sensitization in societal level as well as a drastic overhaul of the patriarchal structure is necessary in order to avert the adverse socio-economic consequences of gender-based violence and extirpate the heinous root of this deplorable crime.
Omicron Variant: Implications on Global Economy
The prolonged battering of the Covid-19 has been considerably hitting the world economy. While vaccination and a receding in the cases of the cases in virus transmission has provided brief respite to the countries that are grappling with the recurring surge of the virus, the resurfacing of another virulent mutation termed as Omicron sounds ominous for the future of the world economy .Against this backdrop, this article projects the plausible economic ramifications of the new strand of the virus on the global economy.
The economic downward trajectory occasioned by the Covid-19 has been unprecedented in recent global history. While the economic depression of 2007-08 proved disastrous for the world economy, the toll emanating from Covid-19 pandemic and consequent economic stagnation has surpassed all the previous economic plunge .In fact, some analysts have gone to the extent of comparing the Covid-19 induced economic depression with the great depression of the 1920s.However, whether the far reaching repercussions of the Covid-19 on the global economy will be as momentous is still remains to be seen. Nevertheless, the profound economic jolt triggered by the Covid-19 pandemic is poised to reverberate across the world through shaping socio-economic and political events
The scar inflicted by a protracted economic recession owing to Covid-19 is apparent in the arduous path of economic rejuvenation in the western countries and eastern countries alike. Virtually every country is grappling with the toll that Covid-19 has incurred in the economy. The western countries are finding it difficult to retrieve the losses that Covid-19 has precipitated. Although the swift vaccination of the western countries at the expense of the developing countries has provided a fleeting lull in their battle against Covid-19,it seem however the virus has resurfaced with increasing virulence in order to offset whatever gain these embattled countries managed to garner in their fight against Covid-19.
The skyrocketing and unprecedented inflation of the western countries coupled with a plummeted consumer confidence has meant a prolonged period of stagnation of their economies. However, in the wake of vaccination induced temporary respite in the viral cases, the economies rebounded strongly from the pits of economic recession. However, these hard-earned gains will be reversed in the event of the advent of any new strand of the virus. Already, the delta variant which originated in India had triggered a spate of Covid-19 flare-ups in the United States and United Kingdom. Against this backdrop, the Omicron variant is set to aggravate the economic woes of the western countries and in turn the world.
While the western countries are reeling from economic stagnation, the developing and underdeveloped countries are confronting many abysmal realities due to their prevailing economic backwardness. Their economic plight has been lingering in want of adequate vaccination due to the apathetic stance of the western countries and global governance institutions .Therefore, while the western countries has rebounded from the Covid-19 induces economic predicaments, the difficulties confronted by the developing countries has continued unabated. While the influence of advanced countries and their less advanced counterparts in world-economy is inextricably tied, the callous attitude of the developed countries to the vaccination of countries in Asia and South Asia turn out to be sheer lack of economic prudence.
While western countries are considered as the economic hub of the world, it is however the developing countries on which the vital supply chains of the world economy hinges on. Therefore, the tardy pace of vaccination in these countries is prejudicial to the global economic stability. The economic ramification of the slow pace of vaccination is twofold for the world economy. Firstly, the slow vaccination hinders the revival of the economic activities in the developing countries thereby obstructing the supply chain of the commodities .This supply chain crisis has ripple effect in the western economies. The recent predicament of inflation and attending macroeconomic woes in countries like the United States and United Kingdom is manifestation of the supply chain crisis plaguing the world economy. Due to the paucity of commodities and raw materials, the prices of necessary goods has escalated in the western countries which has plummeted consumer confidence and triggered a vicious cycle of stagflation in the economy that is reminiscent of the 1970s when a similar crisis in oil supply has precipitated economic downturn in the western economies.
Secondly, the slow rate of vaccination also run the risk of allowing the virus to mutating to newer and much virulent variants and due to the unfettered communication as a result of globalization the emergence of any new variant doesn’t remain in the confines of any border rather proliferate like wildfire and precipitate global crisis. Therefore, the lack of vaccination or slack pace therefore has global repercussions. Therefore, it is judicious of the developed countries to concentrate efforts in contributing to the vaccination of the less developed countries which will yield good results for their economy.
The ubiquitous mechanism in battling Covid-19 remains one of containment that entails halting economic and other activities and insulating the countries from other countries through imposing border controls, curbs on air communication and other stringent measures echoing protectionist attitude. However, these measures are antithetical to the spirit of the globalization and global trade. While lockdowns and other protectionist measures yield temporary improvement in the Covid cases, it is not viable in the longer term. Besides, lockdowns have deleterious ramifications on the economy and further aggravate economic rebounding of the developed countries and developing countries alike. Therefore, efforts should be aimed at preventing the Covid cases rather than grappling with the Covid with a knee-jerk policy of improvisation. .
Moreover,Covid-19 has already occasioned far-reaching economic fallout in the world economy. Indications abound regarding the fact that the world economy is verging on profound and prolonged recession. Against the backdrop of ominous predictions and slackening growth and painful inflation of the world economy, the prospects of the world economy due the advent of a new variant remain mired in obscurity. It can be concluded that the economic repercussions of yet another novel variant will be momentous and will offset hard-earned growth of the countries .Unlike previous precedent of haphazard policy and knee-jerk policy solutions, this time around the countries need to undertake challenge much prudently and should concentrate all of their efforts aiming at universal vaccination of all countries so as to prevent the resurfacing of similar virulent viral strands.
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