The Russia-Ukraine war goes on and the going gets tough and the true test of nations is now, said veteran banker Uday Kotak adding that doing what is right and not populist is crucial. Referring to the Sri Lanka crisis, he also said it tells all what not to do.
“The Russia Ukraine war goes on and the going gets tough. True test of nations is now. Strength of institutions like the judiciary, regulators, police, government, Parliament will matter. Doing what is right and not populist is crucial. A “burning Lanka” tells all what not to do!” Kotak Mahindra Bank CEO Uday Kotak said in a tweet on Tuesday.
The Russia-Ukraine war has adversely affected the global supply chain, thus pushing upwards the prices of commodities across the world.
The Reserve Bank of India last week in an off-cycle monetary policy statement said, “Since the MPC’s meeting in April 2022, disruptions, shortages and escalating prices induced by the geopolitical tensions and sanctions have persisted and downside risks have increased. The International Monetary Fund (IMF) has revised down its forecast of global output growth for 2022 by 0.8 percentage point to 3.6 per cent, in a span of less than three months. The World Trade Organization has scaled down projection of world trade growth for 2022 by 1.7 percentage points to 3 per cent.”
In March 2022, headline CPI inflation surged to 7 per cent from 6.1 per cent in February, largely reflecting the impact of geopolitical spillovers. Food inflation increased by 154 basis points to 7.5 per cent and core inflation rose by 54 bps to 6.4 per cent. “The rapid rise in inflation is occurring in an environment in which inflationary pressures are broadening across the world,” the RBI said.
Meanwhile, the current economic crisis in Sri Lanka is a result of economic mismanagement by successive governments and has been accelerated by the deep tax cuts promised during the 2019 polls by Sri Lankan President Gotabaya Rajapaksa. The Island nation of 2.2 crore people recently rolled out blackouts for up to 13 hours a day as the government did not have adequate forex reserves to pay for the import of fuel.
The country’s inflation rate reached an elevated level. Its retail inflation in February stood at 17.5 per cent, the highest level since 2015, driven by rate hikes in both food (24.7 per cent) and non-food (11 per cent) categories. The inflation in January 2022 stood at 16.8 per cent.
The Asian Development Bank in 2019 had called Sri Lanka a “twin deficit economy”. “Twin deficits signal that a country’s national expenditure exceeds its national income, and that its production of tradable goods and services is inadequate,” it had said.
Sri Lanka’s Prime Minister Mahinda Rajapaksa has also resigned after protests over the island nation’s worsening economic crisis turned deadly.
Read all the Latest Business News here
Comments
0 comment