Asian Development Bank lowers Sri Lanka’s GDP growth estimate for FY2025

The Asian Development Bank (ADB) has revised downward its GDP growth forecast for Sri Lanka, primarily due to the effects of US tariff policies.

The revised forecast, detailed in the ADB’s Asian Development Outlook (ADO) July 2025 report, comes as Sri Lanka’s economy is facing times of uncertainty over the proposed reciprocal tariffs by US President Donald Trump.

The ADB has revised the growth outlook for South Asia for 2025 from 6.0% in the April 2025 ADO to 5.9%.

It noted, “the slight downward revisions for GDP growth in India and Sri Lanka in 2025 are primarily due to the effects of US tariff policies.”

For the broader region, the ADB has lowered growth projections for developing Asia and the Pacific due to a reduction in exports, global trade uncertainties, and weaker domestic demand. The region’s economic growth is now projected at 4.7% for FY2025, down from 4.9% previously, with the forecast for FY2026 also lowered to 4.6%.

The ADB highlighted that escalating US tariffs and trade tensions, geopolitical risks, and global supply chain disruptions could further strain the region’s economic prospects.

Regarding South Asia, the growth outlook for FY2025 has been slightly adjusted down to 5.9%, primarily due to the impact of US trade policies on key economies like India and Sri Lanka.