Sri Lanka’s economic expansion is anticipated to decelerate to 4.0 percent in 2026, a decline from the 5.0 percent growth recorded last year, as reported by the Asian Development Bank (ADB). This forecast could worsen if the ongoing conflict in the Middle East persists.
Lilia Aleksanyan, a Senior Country Economist at ADB, indicated during a press briefing in Colombo on Friday that a prolonged situation in the region could potentially trim growth by between 0.5 percent and 0.8 percent for the year 2026.
Among the negative impacts expected are diminished tourism revenue and increased costs for energy and fertilizer imports. While remittances are presently stable, they are also at risk of being influenced by the conflict.
Furthermore, the unrest could contribute an additional 3.0 percent to 5.0 percent to the inflation rate, which is currently projected at 5.2 percent in the country’s economic outlook report. (Colombo/Apr10/2026)
