EconomyHOTFriday, April 10, 2026

ADB Projects Sri Lanka's Economic Growth to Moderate, Inflation to Rise in 2026

The Asian Development Bank (ADB), in its latest Asian Development Outlook (ADO) April 2026 report, forecasts a moderation in Sri Lanka's economic growth and a significant rise in inflation for the upcoming year. The country's economic growth is projected to slow to 4.0% in 2026, down from 5.0% in 2025, following two years of robust expansion. Concurrently, inflation is anticipated to increase substantially to 5.2% in 2026, from a negative 0.5% in 2025. These projections are based on an early stabilization scenario for the Middle East conflict, which is identified as a key external factor. The conflict's impact on fuel prices, along with potential disruptions to trade, tourism, and remittances, are cited as primary drivers for the anticipated economic shifts. Looking further ahead, the ADB expects growth to slightly increase to 4.2% and inflation to ease to 4.0% in 2027.

2 Updates

Update #3\u00b7 Apr 11 · 9:46 AM

The Asian Development Bank (ADB) has further detailed its economic outlook, with Lilia Alexanyan, Senior Economist at the ADB Sri Lanka Resident Mission, sharing the projections. The ADB warns that if the Middle East crisis is prolonged, Sri Lanka's economic growth could decline by an additional 0.5% to 0.8%. While inflation is forecast to rise to 5.2% in 2026, it is now projected to fall back to 4% in 2027. The Middle East conflict has also led to a significant increase of approximately 50% in fertilizer prices, which is expected to result in considerable increases in food prices in the coming months.

Update #2\u00b7 Apr 11 · 12:32 AM

The Asian Development Bank (ADB) projects Sri Lanka's economic growth to moderate to 4.0% in 2026, further climbing to 4.2% in 2027. This follows two consecutive years of 5.0% strong growth in 2024 and 2025. Inflation is forecast to rise sharply to 5.2% in 2026, up from -0.5% in 2025. The economic outlook is significantly shaped by the Middle East conflict, which is expected to contribute to rising fuel prices and, consequently, higher inflation. These projections are detailed in the ADB's Asian Development Outlook (ADO) April 2026.

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