Sri Lanka’s 2026 economic growth likely to hit three-year low
ECONOMYNEXT – Sri Lanka’s economic growth is likely to slow down this year compared to the last two years amid Middle Eastern escalation dragging down the island nation’s economic activities with high fuel prices.
Sri Lanka, recovering from an unprecedented economic crisis in 2022, expanded by 5 percent in both 2023 and 2024 after a contraction in the previous year.
However, it is expected to slow down this year weighed down by the impact of the Middle Eastern crisis.
Already, the country witnessed 4.2 percent economic growth in the second quarter of this year, its lowest in eight quarters.
Central Bank Governor Nandalal Weerasinghe said the growth will be above 4 percent this year, including the second half of this year.
“I think it is too early for us to give a number. But what we say is, second-half growth looks like it will remain above 4% for the next two quarters, based on the activity indicators. the actual activities taking place,” the Governor told reporters in a media briefing.
“We see growth will be above 4% in the two halves, but an annual projection we have not done yet; we will see later.”
In January while launching the Central Bank’s policy agenda for this year, Weerasinghe saidSri Lanka’s economic growth will be around 4-5 percent.
In June, Deputy Finance Minister Anil Jayantha Fernando said Sri Lanka still hopes to achieve 5 percent economic growth this year despite monetary policy tightening and falling consumption amid rising prices.
“The government projection is up to the government. I don’t think we should not comment on that,” the Governor said.
“The IMF has 3.5%. The government has something, the World Bank has given a projection, the ADB has another projection, so that is based on their own assumptions. We can comment on our projections only.” (Colombo/October 01/2026)