Sri Lanka has been ranked among the highest risk countries in the world for investors by Bloomberg, which analysed as many as 29 indicators covering financial, economic and political risks.
The Bloomberg country risk score, which measures a nation’s risk on a monthly basis based on a range from 0 to 100, put Sri Lanka at a score of 12, indicating a very high overall risk relative to other nations. A higher risk score indicates a lesser overall risk relative to other countries. The Scandinavian nations topped the list and among them Norway has been listed as the lowest risk country with the highest aggregate risk score of 96.5.
Venezuela has been ranked as the highest risk nation with an overall score of 3.1 as the entire Latin American region battles with hyperinflation and political chaos.
Meanwhile, Sri Lanka appears to be slipping further as its reserves adequacy and inflation forecast also point to high-risk territories with each of those quadrants labelled in dark red.
Bloomberg measures Sri Lanka’s foreign reserves sans gold at 3.6 percent as a percentage of gross domestic product, which according to them, could be inadequate to face sudden economic shocks such as hyperinflation and currency depreciation.
Bloomberg forecasts Sri Lanka’s unemployment in 2017 at 5.2 percent – the only moderately risk criteria for the country.
“Unemployment can serve as a proxy for the overall health of the economy. Long-term high unemployment levels eventually lead to less spending power among consumers, lower tax revenues for governments and possible social unrest,” Bloomberg said.
Meanwhile, the Bloomberg country risk score puts United States of America and United Kingdom as low-risk nations while China being risk neutral.
Some commentators argue for higher risk profiles for the US and UK due to the victories of the populist movements in the respective countries by way of the presidency of Donald Trump and Brexit.
Influenced by these developments, populist movements are sweeping through Europe with far right leaders making gains in Germany, France, Italy and the Netherlands with their general elections nearing.