SRI Lanka’s economy grew 4.8 per cent year-on-year in the first three months of 2025, official data showed yesterday, indicating a strengthening recovery from its worst financial crisis in decades.
Sri Lanka’s agriculture sector shrank by 0.7pc in the first quarter from a year earlier, but industrial output expanded by 9.7pc, and services grew by 2.8pc, the census and statistics department said in a statement.
Struck by a severe dollar shortfall, the economy went into free fall in 2022, contracting 7.3pc as it grappled with soaring inflation, a sharply weaker currency and foreign debt default. The economy shrank 2.3pc in 2023.
But it made a stronger-than-expected recovery last year, posting 5pc growth as measures implemented under a $2.9 billion, four-year bailout from the International Monetary Fund (IMF), secured in March 2023, bore fruit.
“We expect growth to be less in the second quarter due to taxes and higher power prices, but we are bullish on growth in the second half of the year,” said Dimantha Mathew, head of research at First Capital.
“We expect full year growth to be between 4pc-5pc.”
Colombo hiked power prices by 15pc last week in its effort to secure IMF executive board approval for the fifth, $334 million, tranche in its programme.
Sri Lanka has made substantial progress on IMF-supported reforms, but more work is needed to reduce the Asian country’s 24.5pc poverty rate, tackle corruption and reduce domestic debt, Gita Gopinath, the IMF’s first deputy managing director, said during a meeting with officials and economists in Colombo on Monday.
Sri Lanka plans to discuss strategies with the IMF to lure foreign investment, President Anura Kumara Dissanayake said on Monday.
Sri Lanka started talks with the United States after Washington imposed tariffs of 44pc in April on its exports of about $3bn. The tariffs were later suspended.
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