The World Bank forecasts that Sri Lanka’s economy will expand by 3.5% in 2025, maintaining its previous projection from October 2024. This growth comes as the nation continues its recovery from a severe financial crisis that began in 2022. The recovery has been bolstered by a $2.9 billion assistance program from the International Monetary Fund (IMF).
However, the economic outlook faces headwinds due to significant U.S. tariffs. The United States has imposed 44% tariffs on approximately $3 billion worth of Sri Lankan exports, posing a potential risk to the country’s export-driven recovery. Despite these challenges, the World Bank emphasizes the importance of maintaining macroeconomic stability, adopting a flexible exchange rate, reforming loss-making state enterprises, and stimulating trade investment to sustain long-term growth.
While economic indicators show improvement, poverty remains a pressing issue. The poverty rate stood at 24.5% in 2024, with many citizens seeking employment opportunities abroad. Looking ahead, the World Bank projects a slight slowdown in growth to 3.1% in 2026. Sri Lankan officials are currently engaging with the IMF in Washington for the fourth review of their support program.
This development highlights Sri Lanka’s ongoing efforts to stabilize its economy and navigate external trade challenges.
