Sri Lanka’s economy is on course for its slowest full year since the post-crisis recovery began, but Central Bank Governor Dr. Nandalal Weerasinghe declined to put a number on 2026 growth at the Monetary Policy Review briefing, telling reporters the Central Bank has not yet completed an annual projection.

“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 said, in remarks reported by EconomyNext.

“We see growth will be above 4% in the two halves, but an annual projection we have not done yet; we will see later.”

The economy grew 4.7 per cent year-on-year in the first half of 2026, slowing to 4.2 per cent in the second quarter from 5.1 per cent in the first — the weakest quarterly print in eight quarters. Full-year growth was 5 per cent in both 2024 and 2025, so a result near 4 per cent would be the lowest in three years.

Weerasinghe said growth was easing to “around 4 per cent,” still above the 3 to 3.5 per cent projected by several other agencies. He pointedly separated the Central Bank’s view from everyone else’s: “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.”

Credit is cooling, but not too far

CBSL Chief Economist Dr. Lasitha Pathberiya said bank lending to the private sector is responding to the May rate increase without stalling the economy, Daily FT reported.

“We still expect this level of credit expansion to be sufficient to support economic activity,” Pathberiya said.

Commercial bank credit to the private sector expanded by Rs. 106 billion in August, down from Rs. 169 billion in July and Rs. 246 billion in June. Year-on-year credit growth slowed to 24.5 per cent from close to 30 per cent earlier. Outstanding private sector credit stood at Rs. 11.5 trillion in July, Rs. 1.2 trillion or 12.1 per cent above end-2025.

That moderation is part of why the Central Bank sees no immediate case for more tightening. The Overnight Policy Rate was raised 100 basis points to 8.75 per cent in May and held unchanged this week.

“Right now, we don’t see the need [for further action]. We will be monitoring closely,” Weerasinghe said, adding that any future move would rest on projections, data and analysis.

Lending rates have followed the May increase. The weekly Average Weighted Prime Lending Rate has risen 136 basis points since the tightening, reaching 10.94 per cent in the week ending 25 September from 9.86 per cent at end-March.

Pathberiya said the Purchasing Managers’ Indices for manufacturing, services and construction all remained in expansion territory in recent months, pointing to continued momentum.

A note on the dates

EconomyNext’s report states Sri Lanka “expanded by 5 percent in both 2023 and 2024.” Those years appear to be shifted by one: Sri Lanka contracted in 2023, and the two consecutive 5 per cent years were 2024 and 2025. The figures above use the corrected years.