Sri Lanka’s working age p o p u l a t i o n g r o w t h i s forecasted to be the highest in the larger Developing Asia driving the country’s growth prospects during the next five years higher, the Asian Development Bank (ADB) said in a recent publication. It is estimated that Sri Lanka’s working-age population would grow at the highest pace in the 45-country bloc during the 2015 – 2020 period compared with the 2008 – 2014 period.
This is despite Sri Lanka having one of the fastest aging populations in the world. “Less favourable demographics span the region, with working-age population growth forecast higher among the sample economies only in Sri Lanka,” the ADB said in its latest Asian Development Outlook (ADO).
Sri Lanka’s annual potential growth rate adjusted for the effects of working-age population trend is estimated between 5.96 percent and 7.22 percent during 2015 – 2020, the ADB data showed. Further, the potential growth in per capita income is estimated to grow by an average 5.33 percent to 6.59 percent annually during 2015 – 2020. In contrast, the potential growth in per capita in Developing Asia is expected to fall relative to 2008 –2014 by an average of 0.17 – 0.58 percentage points annually due to the fall in the working-age population growth over the period outstripping the fall in the total population growth.
The revelation by the Asia-based multilateral lender will certainly come as a silver lining for the now struggling Sri Lanka economy, which otherwise is overshadowed by negative outlooks from many fronts – looming balance of payment and external debt crisis, falling exports and expanding trade and current account deficits, fiscal imbalance and slowing growth among others.
The United Nations projects that growth in the region’s working-age population will be lower in 2015 –2020 than in 2008 – 2014; this demographic effect alone could depress Developing Asia’s potential growth by 0.4 percentage points. “….the growth rate of the working-age population has a direct proportional impact on the potential growth rate,” the ADO said. Developing Asia’s growth is projected to slow to 5.7 percent in 2016 and 2017 from 5.9 percent in 2015 under the difficult and uncertain global environment but the region will contribute around 60 percent of the global growth in the next two years.
The potential growth of a country is the sum of labour productivity growth and the growth in the labour force. The ADB said the region, which earlier benefitted from the demographic dividend such as a favourable age structure, was now turning into a demographic burden with the slowing population growth and aging population