sunil mendis : economic performance, prospects and challenges speech by mr sunil mendis, governor of the central bank of sri lanka, at the donor conference, kandy, 15 - 17 may 2005. * * * introduction honourable minister of finance, representatives of the donor community and friends, sri lanka has achieved considerable economic progress in the past few decades. per capita income has increased, taking sri lanka into the category of a low middle income country. many years of government focus on meeting the social needs of the people have enabled sri lanka to achieve human development indicators well beyond countries with comparable levels of income, in fact, similar to those of more developed middle income countries. the structure of the economy has been diversified from its earlier concentration on primary agricultural commodities, making the economy more resilient to internal and external shocks. overall macroeconomic management has been reasonably sound, although achieving a better balance has sometimes been a challenge due to external and internal shocks. however, despite these positive developments, many weaknesses remain, posing strong challenges to policy makers. poverty still remains at significant levels ; marked disparities in regional economic activity are clearly evident ; unemployment, although declining, is still high, particularly among the youth ; agricultural productivity is low, resulting in low farmer income and higher prices for consumers ; despite some diversification of the economy, exports are concentrated in a few commodities and a few markets, thereby increasing the vulnerability of the economy ; the fiscal deficit has remained high, resulting in inflationary pressures and increasing public debt ; and essential economic infrastructure remains inadequate. these concerns have been aggravated by the tragic consequences of the tsunami that resulted in the loss of so many lives and extensive destruction of property. today, the challenge is to consider how to achieve a balanced growth with economic and social stability. let me now highlight some of the specifics on recent economic developments and policy challenges. macroeconomic developments sri lanka was able to maintain an annual average economic growth of around 5 per cent in the post liberalization era. the country ’ s resilience to adverse shocks has improved with a significant diversification of economic activity, particularly in the export structure. this enabled sri lanka to achieve a growth of 5. 4 per cent in 2004, in spite of several major shocks, such as the surge in international oil prices, a severe drought in the early part of the year and floods later in the year and finally, the tsunami disaster. per capita income has increased to us dollars 1, 030 in 2004. however, overall

lack of childcare availability will continue to hold women back from participating in the labor force, which could be a drag on the economy. the final factor to consider is retirements. many older workers who left the labor force are unlikely to return, and more of those workers were women. the bureau of labor statistics reports that labor force participation among women 65 and older has fallen significantly more sharply than among men. many additional workers over 55 dropped out of the labor force and over time will effectively retire. the loss of these workers will limit the productive capacity of the economy, and may make it harder, or even impossible in the near term, to return to the high level of employment achieved before the pandemic. long - term effects as the economic expansion continues, the lingering effects of the pandemic could have long - lasting implications for women ’ s job opportunities and in the longer term for their careers. as the job market strengthens, many women, particularly minority women, say they are considering returning to the labor force. 5 history tells us that the longer workers remain out of the workforce, the less likely it is that they will return to employment and the greater the likelihood that they will lose skills and connections with the job market, which could weigh on labor force participation and earnings for years to come. there are also effects that are difficult to quantify on the careers of parents who have to juggle even more responsibilities. 6 employees who kept their jobs but reduced their hours or struggled to balance work and home life may find themselves in weaker positions for promotions, raises, and other advancement. lim and zabek, “ women ’ s labor force exits. ” misty l. heggeness, “ estimating the immediate impact of the covid - 19 shock on parental attachment to the labor market and the double bind of mothers, ” review of economics of the household 18 ( october 2020 ) : 1053 – 1078, https : / / link. springer. com / article / 10. 1007 % 2fs11150020 - 09514 - x. these issues extend to women business owners. compared to male business owners, women have reported worse financial health and have less confidence in the future of their businesses. 7 some longer - term factors affecting women ’ s careers are hard to measure, and it may be some time before the full effects of the pandemic are clear. even those who are working may face fewer opportunities to switch careers, or their employment and finances may