Sri Lanka’s economy continued its remarkable recovery in the second quarter of 2025, with official data showing a 4.9% year-on-year growth. This performance indicates a sustained comeback from the severe financial crisis of 2022, which saw the economy contract significantly. This marks the seventh consecutive quarter of positive growth.
Sectoral Performance and Future Outlook
The growth was driven by all three major sectors:
- Industrial Output: expanded by 5.8%.
- Services Sector: grew by 3.9%.
- Agriculture Sector: expanded by 2.0%.
The growth rate of 4.9% exceeded the Central Bank of Sri Lanka’s own forecast of 4.5% for the year, as well as initial estimates by the World Bank and Asian Development Bank, which are expected to be revised. The Central Bank has maintained a cautious approach to monetary policy despite low inflation, aiming to preserve a buffer against potential external shocks.
