Sri Lanka’s economy grew by nearly 5% last year, a second consecutive year of solid expansion after the 2022 collapse — and by the Central Bank’s own numbers it is still not back to where it was before the crisis.
The figures come from ‘Economic and Social Statistics of Sri Lanka – 2026’, the Central Bank’s annual statistical release, published on 31 August. It is an online data release of long-run series compiled by the bank’s Statistics Department, grouped under eight headings including National Output, Expenditure and Income; Prices, Wages and Employment; and Government Finance.
The gap the headline hides
Despite two years of growth, real output remains slightly smaller than in 2019, before the pandemic — and smaller than in 2018, Hiru News reported.
Because the population is larger now than it was then, average output per person is still below pre-crisis levels. On that measure the recovery has further to run than the growth rate alone suggests.
The growth itself has become steadier
The quarterly series shows less volatility than the headline swings of the crisis years. Growth stayed between 4% and 5.5% in every quarter of the past two years, and the most recent quarter — the final three months of last year — came in at 4.8%.
What the deeper series show
Three other movements stand out in the release.
Investment remains far below pre-crisis levels. That is happening even as the country has shifted from borrowing heavily abroad to saving more than it invests — a reversal that closes the external gap but does so partly by investing less.
Inflation across the whole economy has normalised. The GDP deflator, a broader price measure than the consumer price index, peaked above 47% in 2022 and has slowed to under 4%.
Tax revenue has nearly doubled as a share of the economy in three years, the fiscal side of the adjustment programme.
Against that, the trade deficit is widening again as imports recover, having narrowed sharply during the crisis when imports were compressed.
The figures are provisional
Central Bank officials noted that the most recent numbers remain provisional and may be revised in next year’s report.
Neither the Hiru account nor the Central Bank’s release notice gives the precise growth rate for last year, the exact index level against 2018, or the per-capita figures behind the comparison — the detail sits in the downloadable data tables rather than in the announcement.
Context
The picture is consistent with what the external accounts have been showing. The current account has now been in deficit for four consecutive months, with the cumulative January–July deficit at US$387 million against a surplus in the same period of 2025 — the trade-deficit widening described above, visible in the monthly data.
Consumer inflation has moved the other way from the GDP deflator’s long decline, breaching the Central Bank’s upper target band at 8.0% in August.
The Asian Development Bank has forecast growth of about 4% for 2026, a slower rate than either of the past two years — which would push the point at which output regains its 2018 level further out.
Public debt, meanwhile, stood at US$97.952 billion at the end of June.
