Sri Lanka’s economy is forecast to grow by 4.0% in both 2026 and 2027, according to the Asian Development Bank’s Asian Development Outlook, published in September 2026.

The bank expects inflation to reach 6.0% this year before easing to 5.2% in 2027, highlighting continuing price pressures alongside steady economic expansion.

ADB retained Sri Lanka’s growth forecast for 2026, noting that strong, broad-based growth during the first quarter is expected to moderate over the remainder of the year. Its projections place the country’s expansion below South Asia’s forecast growth of 6.4% in 2026 and 6.5% in 2027.

Higher administered fuel and utility prices pushed Sri Lankan inflation upwards between March and July. Although price pressures are expected to ease next year, ADB cautioned that inflation could remain above the central bank’s target amid food cost pressures associated with El Niño.

The regional outlook faces challenges from prolonged energy market disruptions, geopolitical tensions and potentially adverse weather conditions. These developments could complicate business planning and increase uncertainty over operating costs.

In an assessment released in April, ADB Country Director for Sri Lanka Shannon Cowlin recognised the country’s progress since the economic crisis but stressed the importance of maintaining fiscal discipline, strengthening resilience and implementing public investment.

The September outlook reinforces the need for businesses to monitor inflation and external risks as the recovery continues. For policymakers, sustaining reforms and improving economic resilience remain central priorities, while the projected easing of inflation offers some relief for households and enterprises facing persistent cost pressures.