Sri Lanka’s manufacturing sector expanded by 4.1 percent year-on-year in February 2026, according to the latest Index of Industrial Production data released by the Department of Census and Statistics.
The overall IIP reached an index value of 97.3 for the month. Fabricated metal products and apparel were the primary drivers of the growth, reflecting continued demand recovery in key export-oriented sub-sectors.
On a month-on-month basis, manufacturing output grew by 0.3 percent in volume compared to January, a modest but positive sequential gain. The Department described the data as a “favourable economic signal” suggesting progress toward sustained industrial recovery.
The figures provide a welcome counterpoint to broader headwinds facing the economy. Sri Lanka’s manufacturing base has been contending with elevated energy costs linked to the Middle East conflict and Hormuz disruptions, rising input prices from LP gas hikes, and the overhang of Trump administration tariffs on key export markets.
The apparel sector in particular faces a dual challenge: while domestic output is growing, the 44 percent US tariff effective from April 9 threatens to erode competitiveness in Sri Lanka’s single largest export market. The UK’s Developing Countries Trading Scheme offers partial relief by relaxing rules of origin for apparel exports to Britain.
Source: Hiru News.
