IMF Projects Sri Lanka's Economy to Grow 4% in 2026

COLOMBO (News 1st): Sri Lanka's economy is expected to maintain its recovery momentum over the next two years despite mounting global uncertainty, according to the latest World Economic Outlook 2026: Resilience Under Strain, Urgent Choices published by the International Monetary Fund (IMF).

The IMF projects Sri Lanka's economy to grow by 4.0% in 2026 before moderating to 3.7% in 2027, following an estimated expansion of 5.0% in 2025.

While growth is expected to remain positive, the IMF forecasts inflation to rise to 5.3% in 2026 and 5.4% in 2027, after an average inflation rate of-0.5% in 2025. At the same time, unemployment is projected to remain stable at 3.9% over the forecast period.

The IMF's outlook comes at a time when the global economy is grappling with the ongoing conflict in the Middle East, elevated energy prices, geopolitical tensions and trade disruptions.

The report projects Sri Lanka's current account balance to move from a surplus of 1.6% of GDP in 2025 to deficits of 0.5% of GDP in 2026 and 0.3% of GDP in 2027.