The chart shows that the fertility rate in Sri Lanka is 1.99. This is the average number of children born per woman. The fertility rate in Sri Lanka is slightly lower than in the USA, but considerably higher than in the Roman Catholic countries of Italy and Spain.

The fertility rate in India is 2.72, and that in China is 1.79. If the fertility rate is exactly 2, the population will remain static, but if less than 2, the population will decline.

W. Indralal De Silva wrote in 1994 that the declining fertility rate in Sri Lanka could be a problem, because eventually there will be many non-productive old people to be cared for.

http://www.un.org/Depts/escap/pop/journal/v09n4a1.htm

However, a recent article in the `Economist` disagrees:

SOMETIME in the next few years (if it hasn`t happened already) the world will reach a milestone: half of humanity will be having only enough children to replace itself. That is, the fertility rate of half the world will be 2.1 or below. This is the replacement level of fertility , the magic number that causes a country`s population to slow down and eventually to stabilise.

The move to replacement-level fertility is one of the most dramatic social changes in history. It manifested itself in the violent demonstrations by students against their clerical rulers in Iran this year. It almost certainly contributed to the rising numbers of middle-class voters who backed the incumbent governments of Indonesia and India. It shows up in rural Malaysia in richer, emptier villages surrounded by mechanised farms.

Higher standards of living reduce fertility. And lower fertility improves living standards. This is what China`s government says. It is also the view that has emerged from demographic research over the past 20 years.* In the 1980s, population was regarded as relatively unimportant to economic performance. American delegates told a UN conference in 1984 that population growth is, in and of itself, neither good nor bad it is a neutral phenomenon. Recent research suggests otherwise.

Cutting the fertility rate from six to two can help an economy in several ways. First, as fertility falls it changes the structure of the population, increasing the size of the workforce relative to the numbers of children and old people. When fertility is high and a country is young (median age below 20), there are huge numbers of children and the overall dependency ratio is high. When a country is ageing (median age above 40), it again has a high dependency ratio, this time because of old people.

But the switch from one to the other produces a Goldilocks generation. Because fertility is falling, there are relatively few children. Because of high mortality earlier, there are relatively few grandparents. Instead, countries have a bulge of working-age adults. This happened to Europe after the baby boom of 1945-65 and produced les trente glorieuses (30 years of growth). It is happening now in Asia and Latin America. East Asia has done better than Latin America, showing that lower fertility alone does not determine economic success.

Slowing fertility has other benefits. By making it easier for women to work, it boosts the size of the labour force. Because there are fewer dependent children and old people, households have more money left for savings, which can be ploughed into investment. Chinese household savings (obviously influenced by many things, not just demography) reached almost 25% of GDP in 2008, helping to finance investment of an unprecedented 40% of GDP. This in turn accounted for practically all the increase in Chinese GDP in the first half of this year.

Lastly, low fertility makes possible a more rapid accumulation of capital per head. To see how, think about what happens to a farm as it is handed down the generations in a country without primogeniture. The more children there are, the more the farm is divided. Eventually, these patches become so tiny they cease to be efficient. This is occurring in Bangladesh.

My personal interpretation is that Sri Lanka will have a `window of opportunity` for the next 10 years or so for rapid economic progress. After that, the increasing number of old people could become a burden on the economy.