According to a Global Focus country briefing by Standard Chartered Bank, Sri Lanka’s economic growth is anticipated to moderate in 2026. Despite this moderation, the overall outlook remains positive due to political stability, policy continuity, and ongoing reforms.
The bank predicts a GDP growth of 3.5% in 2026, down from an estimated 4.5% in 2025. This growth is expected to be supported by factors such as low inflation, robust remittance inflows, reduced interest rates, a continued recovery in tourism, and increased government capital expenditure. Additionally, private investment is likely to improve as supply-side constraints ease.
However, there are risks that could affect this outlook. The report highlights concerns such as infrastructure damage from Cyclone Ditwah, limited fiscal space, constrained external financing, and global economic uncertainty. It emphasizes that continued fiscal consolidation and prudent debt management are crucial in managing Sri Lanka’s elevated financing needs.
The current account surplus is projected to narrow to 1% of GDP in 2026 from an estimated 1.8% in 2025, as imports are expected to increase alongside stronger growth. Nonetheless, remittances and tourism earnings are anticipated to remain supportive.
Standard Chartered forecasts that the Central Bank of Sri Lanka will maintain policy rates throughout 2026, with inflation projected at 4.5%. Additionally, the report predicts a gradual depreciation of the rupee, with the USD/LKR rate expected to reach 315 by the end of 2026.
