Sri Lanka’s current economic growth rates will not be sufficient to create jobs for one million people entering the workforce in the next decade, a leading World Bank economist said.
In an exclusive interview with Media , World Bank Lead Economist for Maldives, Nepal and Sri Lanka Arvind Nair said about a million Sri Lankans will enter the workforce over the next decade, and if the growth rates continue the way they are, the number of new jobs created will be significantly lower than what is needed.
“So we are looking at a real jobs gap if growth remains slow. That’s why we need the private sector to invest and create jobs,” he said.
The World Bank has predicted three to four per cent growth for this year.
He said, “There’s also the issue of welfare. If you look at poverty, the rate has basically doubled since the crisis. And to reverse that, growth is a prerequisite. So growth becomes essential—not just from the angle of fiscal, but also for jobs and improving people’s living standards.
Country Economist for Sri Lanka, Ms Shruti Lakhtakia said that there have been improvements on both the fiscal and external fronts since the crisis began, and it was a positive sign.
“And really, for any kind of growth, that’s the first step – we need stability before we can think about achieving higher and more sustained growth, and before the private sector can invest. We also need to make sure that stability continues. That means staying on the fiscal path and making sure the exchange rate adjustments continue,” she said.
However, she said that the projected growth rate is enough to keep debt sustainable — if debt sustainability is defined as reaching a debt to GDP target of 95 per cent by 2032, as outlined under the IMF programme. In fact, you can technically reach that target even with 3 per cent growth.
“But that level of growth is not enough to achieve the aspirations of the Sri Lankan people. And achieving those debt targets with only 3 per cent growth means the government has to maintain a very high level of fiscal austerity. That kind of austerity, as we know, is hard to sustain for a long period. The government also needs room to respond to unanticipated shocks, like the devastating natural disaster that we just experienced with Cyclone Ditwah. And to reverse that, growth is a prerequisite. So growth becomes essential—not just from the angle of fiscal, but also for jobs and improving people’s living standards,” she said.
