Sri Lanka's economy grew 5.1% in first quarter of 2026

COLOMBO: Sri Lanka’s economy grew 5.1% year-on-year in the first three months of 2026, the statistics department said on Monday, as the island nation slowly recovers from a severe financial crisis four years ago.

The International Monetary Fund, which is supporting the country with a $2.9 billion lending programme, expects Sri Lanka’s economy to expand 3% this year, slowing down from growth of 5% in 2025.

Sri Lanka, which imports all its oil, introduced fuel rationing in March and made Wednesdays public holidays to limit consumption and protect its foreign reserves amid conflict in the Middle East, all of which is likely to slow growth down.

There was no official forecast for first-quarter growth, but the 5.1% reading was in line with the roughly 5% figure mentioned by the central bank governor last month as he announced a 100 bps benchmark interest hike.

Output from the agriculture sector grew by 1.1% year-on-year in January-March, while that of industries expanded 7.2% and services by 3.4%, the Department of Census and Statistics said in a statement.

Sri Lanka monetary stance appropriate, 3% growth target within reach, IMF says

The economy appears to have survived the ravages of Cyclone Ditwah, which hit the country in late November, killing nearly 650 people and causing $4.1 billion in damage, according to World Bank estimates.

“Given this momentum that we have seen in the first quarter, Sri Lanka is on track to post more than 4% growth by the end of the year,” said Raynal Wickremeratne, head of research and strategy at NDB Securities.

The central bank raised rates in May after soaring energy prices from the Middle East crisis doubled inflation from 2.2% in March to 5.5% in May.