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Sri Lankan workers protest in front of the president's office at Colombo.

Tharaka Basnayaka via Reuters Connect

What We’re Watching: Sri Lanka on strike, trouble in Transnistria, Salvadorans back Bukele

Sri Lankans strike to get president out

Virtually all business activity in Sri Lanka ground to a halt on Thursday, as workers went on a nationwide strike to demand the resignation of President Gotabaya Rajapaksa. For weeks, Sri Lankans have been protesting amid the country’s growing economic and political crisis. Sri Lanka is on the brink of bankruptcy, having already defaulted on its sovereign debt and depleted its foreign currency reserves used for food and fuel purchases. Officials have been trying to get some relief from China and the International Monetary Fund, but Beijing will only refinance, and the IMF requires deep economic reforms. Meanwhile, trade unions say they'll strike permanently if Rajapaksa doesn't step down by May 6. The president is willing to appoint a new interim government and even drop his brother Mahinda as PM, but Mahinda himself has refused to resign. The opposition, which is close to getting a no-confidence vote to remove both Rajapaksas, hopes to appease Sri Lankans who have lost faith in their political leadership.

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Haiti Stuck in A "Vicious Circle," Says IMF Economist | Global Stage | GZERO Media

Haiti stuck in a "vicious circle," says IMF economist

Amid the current global turmoil, one country that's definitely no stranger to crises is Haiti. Haitians will surely feel the pinch of rising prices of things like food and fuel, International Monetary Fund economist Nicole Laframboise says during a Global Stage conversation with GZERO Media in partnership with Microsoft.

With more than 60% of the population under the poverty line and food inflation up 40%, it's going to be "extremely difficult for the poor," she told Shari Friedman, Eurasia Group's Managing Director for Climate and Sustainability.

Haiti didn't suffer as much from the economic shock of the pandemic as other countries because it doesn't trade much nor have a big tourism sector.

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Drivers push their three-wheelers while waiting in a line to buy petrol amid the country's economic crisis in Colombo, Sri Lanka.

Reuters

Is the global debt apocalypse here?

As the world largely began shifting to the “we have to learn to live it” stage of the pandemic late last year, many economists anticipated that hard-hit low- and middle-income countries might finally catch a break.

But then Vladimir Putin’s imperialist instincts got the better of him, and Russia decided to pancake Ukraine. The war’s economic effects are reverberating worldwide, with food and fuel shortages sending already high inflation soaring. Unsurprisingly, emerging economies with shallow pockets are reeling.

The backstory. Amid the pandemic, many low-income countries took on new debt to insulate their economies from the economic pain caused by rolling lockdowns, closed borders, and business closures. But even before COVID, many countries – such as Zambia, Sri Lanka, and Ecuador – were already heavily indebted partly as a result of government mismanagement and corruption. The pandemic-induced recession caused global indebtedness to balloon to a 50-year high.

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Paige Fusco

Will stagflation make a comeback?

America’s fashionistas are super excited these days about 1990s crop tops, baggy outfits, and tattoo chokers, but economists are freaking out over a specter from a different decade: the ’70s. That’s when the US economy sputtered into what's known as “stagflation.”

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A torn flag of Ukraine hung on a wire in front of a destroyed apartment building in Mariupol.

REUTERS/Alexander Ermochenko

What We’re Watching: All eyes on Mariupol, IMF to the rescue, Shanghai mulls easing lockdown

Mariupol's last men standing

As President Volodymyr Zelensky predicted, Ukraine’s remaining fighters in Mariupol ignored Moscow’s deadline to surrender on Sunday. Zelensky has warned that he'll call off peace talks if Russia carries out threats to kill these defenders. After a seven-week siege, Russia is close to capturing the strategic southeastern port city. This would help form a land bridge from mainland Russia to Crimea and boost Russia’s efforts to gain control of eastern Ukraine. The Kremlin recently decided to concentrate on the Donbas in the second phase of its invasion. But Russia continued to also strike the capital, Kyiv, over the weekend and hit Lviv in western Ukraine with missiles on Monday. Is this a response to Friday’s sinking of the Moskva, the flagship of Russia's Black Sea fleet? The EU, meanwhile, is preparing its next round of sanctions, and Zelensky’s economic adviser estimates that Ukraine will need at least $1 trillion for its economy to recover from the war with Russia. Where will it get the money? Keep reading ...

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Activists demonstrate with a cardboard depicting late President Juan Domingo Peron and Maria Eva Duarte Peron, as Argentines demonstrate in support of Fernandez's administration as they celebrate the Loyalty Day, which commemorates the massive mobilization by supporters of Peron to demand his release after he was imprisoned, in 1945, in Buenos Aires, Argentina October 17, 2021.

REUTERS/Agustin Marcarian

The end of Peronismo in Argentina?

Argentina is famous for tango, literary greats like Jorge Luis Borges, and for producing (arguably) the world's two best soccer players of all time in Diego Maradona and Leo Messi. It's the third-largest economy in Latin America, and a global agricultural powerhouse.

Unfortunately, the country is also known for chronic political instability and has long been tagged an economic basket case — the direct result of successive populist governments spending beyond their means, and getting others to foot the bill for their mismanagement.

Messy politics and economic emergencies are all too common in Argentina. But after Sunday's midterm elections, Argentines can expect an especially rocky next two years.

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A man reacts during a rally to support the National Defense Force and to condemn the expansion of the Tigray People Liberation Front fighters into Amhara and Afar regional territories at the Meskel Square in Addis Ababa, Ethiopia August 8, 2021.

REUTERS/Tiksa Negeri

What We're Watching: Everyone vs Ethiopian PM, Brazil ditches Huawei, (more) trouble in Sudan, Argentina's midterms, Iraqi powder keg

Opposition forces unite in Ethiopia's civil war. The Tigray People's Liberation Front, which has been locked in a brutal year-long civil war against Ethiopian government forces, has now teamed up with another powerful militant outfit that wants to oust Prime Minister Abiy Ahmed. The TPLF, now in alliance with the Oromo Liberation Army — which claims to represent Ethiopia's largest ethnic group — have swept towards the capital Addis Ababa in recent days, prompting the embattled Abiy to call on civilians to take up arms in defense of the city. The Tigray-Oromo alliance, called the United Front of Ethiopian Federalist Forces, has called for Abiy's immediate ouster, either by negotiation or by force, and for the prosecution of government officials for war crimes. The UN says all sides in the conflict have committed abuses. The US, which has threatened to suspend Ethiopia's trade preferences over the government's alleged war crimes, is currently trying to broker a cease-fire. When Abiy came to power after popular protests in 2018, he was hailed for liberalizing what was formerly an extremely repressive government (controlled, as it happens, by the TPLF). Now it's looking like he may have unleashed the very forces that could tear the country apart and drive him from office — or worse.

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Argentina's President Alberto Fernandez attends a ceremony to announce new agro-economic measures inside the museum of Casa Rosada presidential palace, in Buenos Aires, Argentina September 30, 2021.

Mati­as Baglietto/NurPhot

What We're Watching: Argentina's midterm elections

Argentina votes, ruling party in deep trouble. Argentines go to the polls this coming Sunday to vote in the country's midterm legislative elections, with the ruling leftwing coalition of President Alberto Fernández bracing for heavy losses in both houses of parliament. The result will likely reflect the outcome of last September's primary elections, where the president's allies got clobbered by the center-right opposition. Since then, Fernández has caved to pressure from his powerful VP, former president Cristina Fernández de Kirchner (no relation), to double down on social spending and government intervention in the economy to curb skyrocketing inflation. But it hasn't worked: Fernández has capped prices on a whopping 1,432 products, yet annual inflation remains over 50 percent. Without a senate majority, it'll be very hard for the president to get much done in the second half of his term at the worst possible time: economists fear Argentina may stiff the IMF on part of the $45 billion it owes early next year. Another default could lead to a run on banks like in 2001, when the country suffered one of its worst financial crises ever. With presidential elections not on the horizon for another two years, buckle up for a lot of political instability until then.

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