Sri Lanka’s economic recovery is expected to remain on track in 2026, supported by policy continuity, easing inflation and improving investor confidence, according to the latest research from Standard Chartered Bank.
The outlook was discussed today at a media conference following the Bank’s annual Global Research Briefing for Corporate clients, where Standard Chartered’s Global Researchers and Economists assessed Sri Lanka’s macroeconomic prospects against an increasingly uncertain global backdrop.
Speaking to the media the Researchers forecast GDP growth of 3.5% in 2026, following an estimated 4.5% expansion in 2025, as the economy transitions from a post-crisis rebound toward more sustainable growth. Consumption is expected to remain resilient, supported by low inflation, steady remittance inflows and lower interest rates, while tourism and investment activity continue to recover.
Sri Lanka’s current account balance is projected to remain in surplus, although narrowing to around 1% of GDP in 2026, as imports linked to consumption and investment pick up. Strong remittances and continued growth in tourism, expected to increase by 5 to 10% next year, are likely to support external balances.
Inflation is forecast to average 4.5% in 2026, allowing the Central Bank of Sri Lanka to keep policy rates on hold as it balances growth support with external-sector stability. While private-sector credit growth has strengthened sharply, Standard Chartered expects monetary authorities to remain cautious to avoid renewed pressure on imports and foreign reserves.
Fiscal consolidation remains a key anchor for confidence. The 2026 Budget, aligned with IMF reform commitments, targets a primary surplus of 2.5% of GDP, supported by stronger revenue collection. Standard Chartered noted that improving debt affordability and sustained reform momentum could support a gradual improvement in Sri Lanka’s sovereign credit outlook.
Political stability is expected to continue into 2026, reinforcing policy continuity and providing a supportive backdrop for investment-led growth.
The conference featured insights from Divya Devesh, Co-Head of FX Research for ASEAN and South Asia, Madhur Jha, Global Economist and Head of Thematic Research, and Saurav Anand, Economist for India and Sri Lanka, who highlighted the importance of reform continuity and investment-led growth.
The event was also addressed by Bingumal Thewarathanthri, Chief Executive Officer of Standard Chartered Bank Sri Lanka, who underscored the role of political stability and policy consistency in reinforcing investor confidence.