Amidst the economic crisis in China, billionaire investor George Soros today warned developing countries that they will have to make “harsh” choices as funds are no longer pouring into those nations.
“Money is no longer coming to developing countries and harsh choices will have to be made instead of waiting for things to get better,” Soros said.
He warned that external global environment will be hostile in the future and that funds would flow out of developing countries.
The world is now in a deflationary situation and developing countries that benefited from the commodity boom, the 85-year-old business magnate and philanthropist said while addressing the Sri Lanka Economic Forum here.
The forum is backed by George Soros’s Open Society Foundation and the Centre for Development at Harvard University.
China’s central bank devalued the yuan last Thursday, then announced the biggest month-on-month drop in its foreign exchange reserves. A World Bank report has highlighted weaknesses in China’s economy as the currency slid to its weakest point since 2011.
Recent moves by Beijing to depreciate the yuan have ignited fears that the world’s second-largest economy is slowing more than expected and could trigger another wave of competitive currency devaluation in the region.
China is responsible for 17 per cent of all the world’s economic activity, so any downturn in spending there affects the rest of the world, experts say.
At the forum, Soros said he is looking at investment opportunities in Sri Lanka which has a great scope in tourism.
“I am impressed with this government and what they have achieved in a short period of time,” Soros said.
Soros said there were opportunities for Sri Lanka in tourism. “Sri Lanka is a bright spot and I think there is great opportunity in tourism.”
The country must make a shift from being an agriculture based economy to a knowledge based economy, he added.
Sri Lankan Prime Minister Ranil Wickremesinghe in his address to the forum said, his country can be a high income nation in the style of East Asia, if the state fiscal problems can be solved and all communities get together.
He said the island nation was facing challenges, which need to be countered if jobs and high income were to be achieved.
Wickramasinghe said Sri Lanka was now on a path to create an inclusive growth after the end of a decades old separatist conflict where all people would have a better life.
The opposition however has criticised the visit of Soros.
They claimed he was responsible for share market crashes of many nations where he had invested.