📈 Sri Lanka Economic Outlook: Challenges Persist Amid Global & Domestic Shifts

• Overall Growth & Outlook: Based on World Bank and IMF data, Sri Lanka's economy stabilized with a 5.0% growth rate in 2025, driven by higher exports, fiscal discipline, and foreign remittances. However, due to external global factors, growth is projected to decelerate to 3.1% in 2026. • Global Vulnerabilities: The domestic economy faces headwinds from a projected Global North slowdown, high global inflation, and supply shocks. Key external risks include the fallout of US trade policies (IMF projects global growth at 3.3% for 2026 and 3.2% in 2027), ongoing geopolitical conflicts, and climate crises like the 2025 Cyclone Ditwah. • Fiscal & Economic Reforms: The NPP government continues the US$ 3.00 Bn IMF Extended Fund Facility program. While the economy has stabilized, rising inequality remains an issue, prompting calls to shift the tax burden toward affluent classes to ease the impact on low- and middle-income groups. • Governance & Anti-Corruption: The government has made progress in clean governance, with Sri Lanka’s Transparency International Corruption Perceptions Index score improving from 32 in 2024 to 35 in 2025. However, some domestic setbacks remain, including delayed actions on specific import misconduct allegations and unfulfilled ethnic reconciliation promises.