FINANCIAL CHRONICLE – In the second quarter of 2026, Sri Lanka’s Gross Domestic Product (GDP) experienced a growth of 4.2 percent. This marks a decline from the 5 percent growth recorded during the same period last year and a drop from the previous quarter’s expansion of 5.1 percent, according to data from the Department of Census and Statistics.

The quarter was marked by various challenges, primarily due to fuel rationing and elevated energy prices following the government’s increase in fuel costs amid escalating tensions in the Middle East.

The state-owned Statistics Department commented, “The onset of the second quarter of 2026 presented a rather pessimistic economic outlook, largely influenced by the rising conflicts in the Middle East.” They noted that this uncertainty significantly impacted economic activities during the quarter, exacerbated by a perceived shortage of crude oil. Furthermore, the tourism sector’s performance was notably subdued.

Additionally, agricultural activities saw a downturn, and many key sectors experienced slower growth compared to the same quarter in 2025.

In terms of figures, GDP at constant (2015) prices reached approximately 3,029.6 billion rupees in Q2 2026, an increase from 2,908.6 billion rupees in Q2 2025. This growth is a continued recovery from the 10.6 percent contraction that occurred at the peak of the economic crisis in the first quarter of 2023.

The report highlighted that the industrial sector was the primary driver of growth, expanding by 7.3 percent and accounting for 52.7 percent of the total economic output. Conversely, agricultural activities contracted by 2.3 percent, while the service sector saw a growth of 2.7 percent.

According to the Statistics Department, sectors such as accommodation and food services, financial services, and insurance activities reported comparatively lower growth rates during this period. (Colombo/September 15/2026)