Sri Lanka’s economy is projected to grow by 4.0% in 2026 and 3.7% in 2027, following an estimated growth rate of 5.0% in 2025, according to the International Monetary Fund’s (IMF) latest report 'World Economic Outlook 2026: Resilience Under Strain, Urgent Choices'.
The projections indicate that Sri Lanka’s economic recovery is expected to continue, although growth is forecast to moderate over the next two years amid ongoing domestic and external economic adjustments.
According to the IMF data, Sri Lanka’s average annual inflation rate, which stood at -0.5% in 2025, is projected to rise to 5.3% in 2026 and 5.4% in 2027.
On the external front, the country’s current account balance is projected to shift from a surplus of 1.6% of gross domestic product (GDP) in 2025 to deficits of 0.5% in 2026 and 0.3% in 2027.
Meanwhile, Sri Lanka’s unemployment rate is expected to remain stable at 3.9% throughout the 2025–2027 period, according to the projections.
The forecasts form part of the IMF’s broader assessment of developing and emerging Asian economies, as countries continue to navigate post-crisis stabilisation, fiscal consolidation and changing global economic conditions.
For Sri Lanka, the projections point to continued economic expansion, alongside rising inflation and a shift in the current account balance from surplus to deficit, underscoring the importance of sustaining the recovery while maintaining macroeconomic stability.
