Sri Lanka syndrome: how the crisis reached Bangladesh

Bangladesh, following Pakistan and Sri Lanka, asked for financial assistance from the IMF. The country is going through an economic crisis, electricity is cut off regularly, and residents are saving on everyday expenses.

The factory of Mohammed Sharif Sarker in the suburbs of Dhaka, the capital of Bangladesh, is considered exemplary. On three spacious floors, there are assembly lines with sewing machines, behind which hundreds of young men and women are sewing fashionable baseball caps for EXPORT. There is only one problem - Sarker and his workers are sitting in the dark, production is idle.

In July 2022, Bangladeshi authorities introduced daily mandatory power outages. The country, which is home to 160 million people, has faced serious economic problems following other states of South Asia.

So, in April 2022, Sri Lanka announced a default on its external debt due to a lack of foreign currency for the purchase of essential goods. Subsequently, mass protests began, and President Gotabayi Rajapaksa announced his resignation. In early August 2022, against the backdrop of a sharp decline in foreign exchange reserves, an increase in public debt and a rapid increase in inflation, Pakistan was on the verge of default.

Now the crisis may spread to countries whose economic situation was previously considered stable, writes The Financial Times.