Sri Lankan Economy Grew 5.4% in Third Quarter of 2025

Himasha Dissanayake, JadeTimes Staff

H. Dissanayake is a Jadetimes news reporter covering Economy

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Image Source: Ada Derana

Sri Lankan economy expanded 5.4% year-on-year in the third quarter of 2025, official government figures showed on Monday, underscoring a continued recovery from the severe financial crisis that peaked in 2022.

According to the Department of Census and Statistics, the island nation’s Gross Domestic Product (GDP) rose from its performance in the previous quarter, which recorded a 4.9% growth. The rebound was broad-based, with all major sectors contributing to the positive outcome, highlighted by robust industrial performance.

Key Sector Contributions

• Industry: Industrial output expanded by 8.1%, driven in part by strong growth in construction and mining activities, which helped lift overall production.

  
  

• Agriculture: Agriculture posted a 3.6% increase, reflecting steady gains in crop and related activities.

  
  

• Services: The services sector grew by 3.5%, supported by financial services and other service-oriented activities.

The growth achievement comes amid significant challenges, including Cyclone Ditwah, which struck Sri Lanka in late November, causing widespread damage to infrastructure and agricultural lands and resulting in over 600 fatalities. Authorities estimate the storm affected nearly 10% of the nation’s population, disrupting economic activity across several districts.

Economic Outlook and Support

Despite these setbacks, reconstruction efforts are expected to stimulate further activity in the coming year. The Central Bank of Sri Lanka has projected overall economic growth of about 4.5% for 2025, although some analysts warn that growth could slow to around 3% in 2026 due to cyclone-related impacts.

Sri Lanka remains under a $2.9 billion, four-year IMF program and has sought an additional $200 million in emergency funding from the lender, with an IMF team scheduled to assess progress in January ahead of the next tranche release. Meanwhile, the World Bank is making up to $120 million in emergency support available to help restore critical services in the hardest-hit areas.

The latest data underscores Sri Lanka’s resilient economic momentum amid recovery and reconstruction efforts, as policy makers balance short-term challenges with longer-term growth prospects.