Sri Lanka Independence 2026: Economic Growth Amid Calls for Structural Reform 📈

The 78th Independence Day serves as a critical junction for Sri Lanka, balancing resilient macroeconomic recovery against a backdrop of public frustration over the pace of systemic change and reconciliation. • Overall Economic Performance Based on provisional data for 2025, the economy maintained a positive trajectory with GDP growth accelerating to 5.4% in Q3 2025. Total export earnings for 2025 reached US$ 17.25 Bn, a 5.6% YoY increase, although the trade deficit widened to approximately US$ 7.9 Bn due to a surge in imports, including vehicle purchases totaling US$ 2.05 Bn. • Sector Breakdowns (2025 Performance) • Apparel & Textiles: Remained the primary revenue driver, growing 5.34% to US$ 4.91 Bn. • Tea: Earnings rose 4.97% to US$ 1.51 Bn, bolstered by a 10.18% increase in tea packets. • ICT/BPM: Continued to lead the services sector with an 8.81% growth, reaching US$ 1.64 Bn. • Coconut products: Emerged as a standout performer with a 42.66% surge to US$ 1.23 Bn. • Top Markets & Outlook The United States remains the largest export destination (US$ 3 Bn), followed by India (US$ 1 Bn), which saw a sharp 17.2% growth. For 2026, the government targets an ambitious 5-6% growth rate, supported by a planned Rs. 1.4 Tn in capital expenditure. However, the World Bank and IMF maintain more conservative forecasts of 3.1% to 5.2%, citing the need for sustained structural reforms and debt sustainability.