CBSL Report: 2026 Growth Seen at 4-5% Amid 5% Inflation Target 📈

The Central Bank of Sri Lanka (CBSL) has released its February 2026 Monetary Policy Report, outlining a steady recovery path despite recent climate-related setbacks. • Overall Growth & Outlook The economy is projected to grow between 4% to 5% in 2026, maintaining recovery momentum. Real GDP growth for 2025 is estimated at 4.5%, slightly moderated by disruptions from Cyclone Ditwah in late 2025. • Inflation Dynamics Headline inflation is expected to accelerate and stabilize around the 5% target by the second half of 2026. While core inflation reflects strengthening domestic demand, food inflation remains elevated in the near term due to agricultural supply chain hits. • Sector & Risks • Agriculture: Impacted by Cyclone Ditwah, though re-cultivation efforts are underway to stabilize prices. • Energy & Transport: Deflation has eased; costs are expected to turn positive soon, though sensitive to global fuel prices. • Fiscal Policy: Growth may be constrained by a negative fiscal impulse from planned primary account surpluses. • Key Projections (Provisional) • 2026 GDP Growth: 4.0% – 5.0% • 2025 GDP Growth: ~4.5% • Inflation Target: 5.0% (by 2H 2026) The recovery remains subject to global geopolitical volatility and the effective implementation of domestic structural reforms.