Are South-East asian countries following the path of economic downturn ?

South-East asian countries

As it was widely covered by the media, the social, political, and economic crisis in Sri Lanka have seen dramatic overturns and unrest. Once the " pearl of the Indian ocean ", the island has crumbled into debt, food crisis, energy crisis, and bad governance leading to a massive reaction of the population. Less known and published are the constant influence from foreign States and institutions such as the IMF and private foundations to force the Sri Lanka government to continue on the path of some weird policies (including energy, food production, and tourism) ensuring that it will be " backed up ". Obviously, these promises have been proved to be empty shells.

The worldwide disruption of supply chains due to the massive lockdowns combined with the effects of the anti-russian sanctions and Ukraine war have triggered the social " bomb " in Sri Lanka with massive inflation, three digits price increase, and downturn of foreign investments. But these indicators can be also found in other countries of the region: Myanmar, Nepal, Laos for example.

After the military coup in February 2021, Myanmar has been again placed on the ban of many international transactions, mostly from the West. The coup itself was triggered by the remains of the disastrous Rohingya policies but also by the COVID policies inside and outside the country.

As a result, the country is suffering the same problems Sri Lanka faced: a deadly combination of activity downturn, inflation surge, increase of commodities (including cooking oil, grain, fuel, etc.), slowdown of imports and stop or withdrawals of foreign investments (mostly visible in the textile industry with H&M, Zara and others going away). Despite the candid reassurance of the Junta, the medias and authorities of neighboring countries (i.e. Thailand in June 2022) that the country has enough currency reserves to hold the shock (both on import demand, currency reserves and inflation), the local currency Kyat have fallen from 1340 USD before the coup in February 2021 to 2400 USD just before recent further depreciation. The Central bank have blocked the repayment of foreign loans in June 2022 and the downturn continues. The risk agency Fitch mentions that the contraction of the economy from 2020 was above 20% (17,9% YtY 2020-2021 and 5% Q1 and Q2 2022). It might be useful to remind that during the worste of the debt crisis, Greece suffered a plunge of GDP of " only " 25% with dramatic consequences.

In the top of these disastrous economic situation, the country is rushing into a weapons and militia / army race. The security forces (police and army) have responded very hardly to any protesters, killing many of them and imprisoning the others, including lawmakers, representatives of the opposition party. It is reported that the NDL (National League for Democracy) have seen leaders been killed and party lawmakers been arrested in the trail of the 2021 coup. In the meantime, the opposition National Unity Government of Myanmar " who consider itself as the country's legitimate administration " is expressing problems in weaponizing its 80'000 to 100'000 members spread into 259 townships around the country, not counting on the numerous guerillas they are also in contact with.

The situation is extremely tense and explosive. The recent initiative and talks between Myanmar and Russia, to start bilateral relations are aimed to calm this spiral of both poverty, economical disaster and massive violent unrests. It is not clear yet who is pouring fuel on the fire from the outside. However, the recent weapon's plane crash in Greece with the material "destinated to Bangladesh" could eventually give some hint.

In Nepal, the economical situation is also very tense. " There is growing speculation that the Nepali economy will disintegrate like in Sri Lanka as the country's foreign exchange reserves have shrunk and inflation has soared with rising fuel prices. For the first time since the 2000s, foreign exchange reserves have dropped to around $9 billion, which is barely enough to fund imports for six months, down from 11 months. At the same time, inflation has hit an all-time high of 8,56% with the employment rate remaining as disappointing as usual ". Nepal also suffers from too many private and governmental loans.

The total external debt of Nepal remains at 51 billion US and the massive growth of private loans have turned this figure much higher. With inflation and cross-currency inflation, shortage in supply chains especially in agriculture products (fertilizers), and declining GDP that agitate the specter of a sudden massive recession, the nepalese people shall only rely on food imports that are mostly provided by India at this time.

As a result, the Nepalese government recently banned the import of 10 consumer goods in order to preserve some of its foreign currency reserves.

In addition to this difficult situation, the border dispute between Nepal and China has been revamped with a report of the nepalese civic group Rashtriya Ekata Abhiyan presenting an array of Chinese infringement of Nepalese borders, trying to " crunch " the territory bit by bit. This report highlights gross border violations in the Gurkha district " no man's land " and in Humla district where China built 12 buildings inside Nepalese territories. The Civic group also accuses China of moving or taking off border landmarks, fence (sometimes with barbed wires) these new territories, and even tries to gain control over the Mount Everest summit which is considered as a natural border between the two countries.

Both Nepalese and Chinese governments have agreed on joint inspections of the situation, but it's very unlikely that the small Nepal could counter what appears as a long-time takeover strategy of the Himalayas by Chinese at the expense of all neighboring countries, including India. The strategy is fueled by a number of '' gray zones' ' in the Himalayan borders between all of these countries that shall resolve.

The Nepalese situation reminds India of China in other parts of Himalayas. However, India has always brought assistance to Nepal, like after the powerful earthquake that destroyed a third of Kathmandu, in order to stabilize the region.

But for Nepal itself, these actions are also used to mobilize the populations internally against a foreign " enemy " that could lead on one side to the militarization of the Himalayan region but also to the militarization of the nepalese population with a smoother and trickier way that reminds what is happening also in Myanmar.

Both superpowers of the region, China and India, are trying to play their games to ensure that their border will not become the playground of western foreign interests that will push for social, economical, and political disruptions in the context of the West's war against Russia.

As the economical situation worsens in all the subcontinents, the exit door might be to take decisive actions on the currencies, the balance of payment, and the diversification of production with a main particular focus on their own population, using all the multipolar facilities that are emerging in the Asian continent today.