It's not hidden anymore that the world is going through a financial crisis. But some countries are hit harder than others, and there are signs that they may soon face financial collapse.
You might think that the USA is safe, but the truth is that even the strongest economies in the world are facing financial difficulties.
The following 12 countries are currently on the brink of financial collapse, which could serve as a warning sign for other nations to take notice and implement preventative measures.
This country has been grappling with an economic crisis due to high debt levels after the civil war from 1975-1990. The impact of the COVID-19 outbreak further boosted the crisis.
Government corruption, a default on foreign debt, a devalued currency, and banking issues have also contributed to the crisis. Rising poverty, hunger, and the vanishing middle class are some of the effects of this financial collapse.
2. Sri Lanka
In recent news, we all have witnessed a massive financial downfall in Sri Lanka, leading to the country defaulting on its foreign debt. The pandemic has greatly impacted their already struggling economy, causing major job losses and a sharp decline in tourism.
Sri Lanka used to be a great tourist destination, but many hotels and businesses have shut down due to the ongoing crisis. Government corruption and political instability have also contributed to this economic collapse.
The war between Russia and Ukraine has shocked the world, and its impact on the economy has been devastating. With sanctions from the Western countries, declining oil prices, and a currency crisis, Russia's economy is unstable.
Despite being one of the largest oil and gas producers, the country still faces high inflation rates and a declining GDP. The current situation is a major concern for not only Russia but also for its neighboring countries.
A small country located in South America, Suriname, is currently facing significant financial difficulties. The country's debt levels are extremely high, and they have defaulted on a loan from the International Monetary Fund (IMF).
The global drop in commodity prices has affected their main export – oil – resulting in a government revenue decline. This has led to budget cuts and rising inflation rates, making it difficult for the citizens to make ends meet.
The first African country on this list, Zambia, is facing a debt crisis after borrowing heavily for infrastructure projects. The nation has seen a decline in copper prices – its primary export – resulting in less revenue.
The government's poor funds management and political instability have also contributed to the current financial crisis. To make matters worse, the country is also facing a drought, affecting its agriculture sector.
One of the world's favorite holiday destinations, Belarus, has seen a sharp decline in its currency due to the ongoing political crisis. It is currently facing high inflation rates and low foreign exchange reserves.
The country's reliance on Russia for oil and gas has also put it at risk of economic collapse, as any change in relations between the two countries can severely impact Belarus's economy.
Another country in Africa facing financial issues is Ghana. The country's economy heavily relies on cocoa, gold, and oil exports, making it vulnerable to global market fluctuations.
The country had issues with drug lords and money laundering, leading to sanctions from other countries.
The government's failure to address these issues and slow progress in diversifying the economy has put Ghana at risk of financial collapse.
Somalia is having a really tough time economically. They're dealing with things like lack of rain, high food prices, and money sent from abroad is slowing down.
On top of all that, they're trying to deal with big problems like climate change and government issues. All these problems mean people are leaving the country, causing a big crisis. The country's money situation is in real trouble.
Egypt's economy can face problems like high unemployment rates, inflation, and political instability. If the government spends more than it earns, it can lead to debt. This can scare off investors, which Egypt relies on for money.
Egypt's economy relies heavily on tourism, which has taken a massive hit due to the pandemic. Their relationship with neighboring countries is also a cause of concern since they have relations with some terrorist organizations.
Argentina, a Latin American country, has a long history of economic struggles, with inflation rates among the world's highest. The country has defaulted on its debt multiple times and is facing another potential default.
Political instability, corruption, and mismanagement have contributed to their financial crisis. With high unemployment rates and poverty levels, the citizens are suffering the consequences of their government's actions.
Jordan's economy is feeling the heat. They've had a tough time dealing with COVID-19 and other issues before the pandemic.
The banking sector, which is a big part of their economy, had to deal with stuff like war in neighboring countries and a huge number of refugees.
Plus, there's been talk about people not paying their taxes. All these problems are causing protests and strikes, which can scare off investors. This could push Jordan's economy over the edge.
The last country on our list, Tunisia, has seen major political instability and economic struggles since the Arab Spring in 2010. The country relies heavily on tourism, but due to terrorist attacks and political unrest, the industry has suffered.
High unemployment rates, especially among educated youth, lead to social and economic tensions. Corruption and a lack of reforms have also contributed to Tunisia's ongoing financial crisis.
Economic Instability and Politics
These countries face economic challenges due to political instability, corruption, mismanagement of funds, and external things like the pandemic or declining commodity prices. Governments must take action and implement reforms to stabilize economies and improve citizens' lives. We must take lessons from these situations and work towards creating a more stable and resilient global economy.
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I’m Steve. I’m an English Teacher, traveler, and an avid outdoorsman. If you’d like to comment, ask a question, or simply say hi, leave me a message here, on Twitter (@thefrugalexpat1). Many of my posts have been written to help those in their journey to financial independence. I am on my journey, and as I learn more I hope to share more. And as always, thanks for reading The Frugal Expat.