World Bank sees Sri Lanka growth slowing to 3.6% in 2026 amid energy shock

SRI Lanka’s economic growth is expected to slow to 3.6% in 2026 as higher energy prices weigh on activity, although the economy will regain its pre-crisis size last seen in 2018, the World Bank said in its latest South Asia Economic Update April 2026.

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Growth is projected to edge up to 3.8% in 2027, with the moderation from 2025 reflecting “higher energy prices as well as a shift from recovery to a pace consistent with its potential,” the report said.

The World Bank noted that growth will be driven primarily by consumption and investment, supported by post-cyclone reconstruction, even as the economy “continues to grapple with the lingering effects of the crisis, shortages of skilled workers exacerbated by outward migration, and continued under-execution of the capital Budget.”

SRI Lanka is in a stronger position to cushion the impact of rising energy costs following improvements in revenue mobilisation, though vulnerabilities remain due to its reliance on fuel imports, the international Monetary Fund (IMF) said last week.

IMF Asia Pacific Department Director Krishna Srinivasan, speaking at a press conference at the launch of the Regional