COLOMBO – The World Bank has projected that Sri Lanka’s economic growth will decelerate to 3.5% in 2025, marking a slowdown from the estimated 5% expansion expected this year.
The forecast, released as part of the Bank’s updated regional outlook, attributes the expected decline to a combination of persistent structural constraints, global economic headwinds, and unresolved trade policy uncertainties.
In 2024, Sri Lanka’s economy is anticipated to grow by 4.4%, exceeding earlier estimates. However, the Bank cautions that this recovery momentum is likely to weaken in the coming year.
“Despite the stronger-than-expected performance, approximately a third of Sri Lanka’s population remains in poverty or is at risk of sliding back into poverty,” the World Bank noted.
The report highlights that while certain macroeconomic indicators have improved, deep-rooted economic vulnerabilities remain. The need for comprehensive reforms, particularly in fiscal governance, trade policy, and investment frameworks, is seen as critical to ensuring sustainable growth.
The World Bank further emphasized that inclusive policy measures, supported by international cooperation and domestic resilience, are essential to prevent socioeconomic setbacks as the country continues to emerge from its economic crisis.
With Sri Lanka still facing the effects of its 2022 sovereign debt default, the outlook serves as a stark reminder that growth alone is not sufficient unless coupled with systemic reform and equitable development.
