FINANCIAL CHRONICLE – Sri Lanka’s economic growth is anticipated to decelerate this year compared to the previous two years, primarily due to escalating tensions in the Middle East, which are adversely affecting the nation’s economic activities alongside soaring fuel prices.
Having emerged from an extraordinary economic crisis in 2022, Sri Lanka experienced a growth rate of 5 percent in both 2023 and 2024, following a contraction the prior year.
Nonetheless, the ongoing Middle Eastern crisis is expected to weigh heavily on the economy this year.
In fact, Sri Lanka reported a growth rate of 4.2 percent in the second quarter of this year, marking its lowest growth in two years.
Central Bank Governor Nandalal Weerasinghe stated that growth is projected to surpass 4 percent for the entirety of this year, including the latter half.
“While it is premature to provide a specific figure, we anticipate that growth in the latter half of the year will remain above 4 percent over the next two quarters, based on current activity indicators,” the Governor explained during a press briefing.
“We expect growth to exceed 4 percent in both halves of the year, but we have not yet made an annual projection; that will be assessed later,” he added.
In January, when unveiling the Central Bank’s policy agenda for the year, Weerasinghe had indicated that Sri Lanka’s economic growth was projected to be around 4-5 percent.
In June, Deputy Finance Minister Anil Jayantha Fernando expressed optimism that Sri Lanka could still attain a 5 percent growth rate this year, despite the tightening of monetary policy and a decrease in consumption due to rising prices.
“The government’s projections are ultimately the government’s responsibility. I believe it is not our place to comment on that,” the Governor remarked.
“The IMF has a projection of 3.5 percent. The government has its own estimate, the World Bank has made its projections, and the ADB has provided additional forecasts, each based on their assumptions. We can only comment on our own projections,” he concluded. (Colombo/October 01/2026)
