Amid worker unrest and insecurity in the industrial sector, entrepreneurs and bankers have urged the new administration to focus on rebuilding confidence in the economy.

Sri Lanka’s worst economic crisis since its independence began in 2019. Experts attribute a plethora of reasons behind the crisis. First, after the end of the civil war in 2009, the country emphasised providing goods for the local market instead of trade, a decision that led to a continued trade deficit of more than $3 billion each year. Along with trade policies, tax cuts in 2019 led to a loss of government revenue of over $1.4 billion a year.

In June last year when Finance Minister AHM Mustafa Kamal placed the budget in parliament, inflation had already been creeping up and the foreign currency reserves were on the decline. These two had derailed the full economic recovery from a two-year crisis wrought by the Covid pandemic.

Migration worldwide happens for two main reasons, both central to economic development. First, people migrate to seek better jobs and move to where they are more productive. Second, people migrate to cope with local economic shocks, such as weather-related disasters that continue to strike South Asia at a resounding pace.

Specific policy incentives are needed to stimulate the economy and revive the labour market.