COLOMBO, October 7, 2025—Sri Lanka’s recent economic performance has been strong. Despite this, the recovery remains incomplete, with growth still below pre-crisis levels and poverty significantly elevated. Strengthening the recovery will require continued macroeconomic stability, urgent structural reforms, and more efficient, better-targeted public spending, says the World Bank.
Released today, the latest Sri Lanka Development Update, Better Spending for All, projects Sri Lanka’s economy to grow by 4.6 percent in 2025 — supported by a modest rebound in industry and steady growth in services — before slowing to 3.5 percent in 2026. This outlook is subject to heightened risks, including from elevated global uncertainty.
“While Sri Lanka’s recent economic progress is encouraging, the recovery is uneven and incomplete,” said David Sislen, World Bank Division Director for Maldives, Nepal, and Sri Lanka. “To build a stronger, fairer economy that benefits all households, in a fiscally constrained environment, Sri Lanka needs the private sector to invest and create jobs and ensure that every rupee of public money is well-spent.”
Although recent growth is strong, inflation low, and external inflows robust, food prices have remained high, and reserve accumulation has slowed. Sri Lanka’s economic output is still below 2018 levels. Poverty, although declining, remains twice as high as in 2019. The labor market has been slow to recover, and many households have yet to regain livelihoods lost during the crisis. An additional 10 percent of the population lives just above the poverty line, and malnutrition remains a serious issue, especially among vulnerable groups.
https://www.worldbank.org/en/news/p...y-remains-incomplete-as-key-challenges-remain
Released today, the latest Sri Lanka Development Update, Better Spending for All, projects Sri Lanka’s economy to grow by 4.6 percent in 2025 — supported by a modest rebound in industry and steady growth in services — before slowing to 3.5 percent in 2026. This outlook is subject to heightened risks, including from elevated global uncertainty.
“While Sri Lanka’s recent economic progress is encouraging, the recovery is uneven and incomplete,” said David Sislen, World Bank Division Director for Maldives, Nepal, and Sri Lanka. “To build a stronger, fairer economy that benefits all households, in a fiscally constrained environment, Sri Lanka needs the private sector to invest and create jobs and ensure that every rupee of public money is well-spent.”
Although recent growth is strong, inflation low, and external inflows robust, food prices have remained high, and reserve accumulation has slowed. Sri Lanka’s economic output is still below 2018 levels. Poverty, although declining, remains twice as high as in 2019. The labor market has been slow to recover, and many households have yet to regain livelihoods lost during the crisis. An additional 10 percent of the population lives just above the poverty line, and malnutrition remains a serious issue, especially among vulnerable groups.
https://www.worldbank.org/en/news/p...y-remains-incomplete-as-key-challenges-remain
