IMF Projects Sri Lanka’s Economic Growth at 4% in 2026

Sri Lanka’s economy is projected to grow by 4.0% in 2026 and 3.7% in 2027, following an estimated expansion of 5.0% in 2025, according to the International Monetary Fund’s (IMF) latest World Economic Outlook 2026: Resilience Under Strain, Urgent Choices report.

The projections suggest that the country’s economic recovery will continue, although the pace of growth is expected to moderate over the next two years as the economy adjusts to domestic and international challenges.

Meanwhile, Sri Lanka’s average annual inflation rate, which was estimated at -0.5% in 2025, is forecast to increase to 5.3% in 2026 and 5.4% in 2027, according to the IMF.

The country’s current account balance is also expected to move from a surplus equivalent to 1.6% of gross domestic product (GDP) in 2025 to deficits of 0.5% in 2026 and 0.3% in 2027.

However, Sri Lanka’s unemployment rate is projected to remain unchanged at 3.9% throughout the 2025–2027 period.

The forecasts are included in the IMF’s broader assessment of developing and emerging Asian economies, which continue to face the challenges of post-crisis stabilisation, fiscal consolidation and evolving global economic conditions.

For Sri Lanka, the projections point to continued economic growth alongside rising inflation and a shift in the current account balance from surplus to deficit, highlighting the importance of maintaining macroeconomic stability while sustaining the country’s recovery.