(COLOMBO, LANKAPUVATH) –The international journal, The Economist has ranked Sri Lanka as one of the emerging economies most in the peril due to the COVID-19 epidemic.
Sri Lanka has been ranked 61st among 66 emerging economies examined by the Economist due to its high public debt and foreign debt and low foreign reserves.
Sri Lanka is ranked as the worst hit economy in South Asia. The neighboring India with low foreign debt and high foreign reserves ranked 18th, Bangladesh ranked 8th while Pakistan with high debt ranked 43rd.
The Economist’s ranking examined 66 economies across four potential sources of peril. These include public debt, foreign debt (both public and private) and borrowing costs (proxied where possible by the yield on a government’s dollar bonds). It also calculates their likely foreign payments this year (their current-account deficit plus their foreign-debt payments) and compare this with their stock of foreign- exchange reserves. A country’s rank on each of these indicators is then averaged to determine its overall standing.
The Economist report observes that Covid-19 hurts emerging economies in at least three ways: by locking down their populations, damaging their export earnings and deterring foreign capital.
Even if the pandemic fades in the second half of the year, GDP in developing countries, measured at purchasing-power parity, will be 6.6% smaller in 2020 than the IMF had forecast in October, the Economist projects.