Sri Lanka’s economy grows 4.2 pct in second quarter of 2026

Sri Lanka’s economy grew 4.2 percent year on year in the second quarter of 2026, driven by strong industrial activity, the Department of Census and Statistics said Tuesday.

GDP at current prices increased 11.3 percent to 8.25 trillion rupees (about 25.09 billion dollars), compared with 7.41 trillion rupees (about 22.54 billion dollars) in the corresponding period of 2025, the Department said.

Industrial activity expanded 7.3 percent, compared with 5.7 percent growth a year earlier. Services grew 2.7 percent, slowing from 4 percent, while agriculture contracted 2.3 percent after expanding 2.5 percent in the second quarter of 2025.

Services accounted for 52.7 percent of GDP at current prices, while industry and agriculture contributed 25.9 percent and 8.4 percent, respectively. Taxes less subsidies on products represented the remaining 13 percent, the Department said.

The industrial expansion was supported by growth of 17.4 percent in mining and quarrying and 13.9 percent in construction. Manufacturing expanded 3.2 percent. Production of wood products, non-metallic mineral products, furniture, machinery and equipment, basic metals, paper products, and food and beverages recorded growth during the quarter.

However, the manufacture of coke and refined petroleum products declined 15.2 percent, while rubber and plastic products fell 4.2 percent. Textile, apparel and leather manufacturing contracted 1.4 percent.

In the services sector, information technology programming and consultancy activities grew 10 percent. Insurance and pension funding expanded 8 percent, financial services grew 7.7 percent and telecommunications increased 4.8 percent.

Accommodation and food services, which include tourism-related activities, expanded 2.9 percent. Public administration and defense was the only major services subsector to contract, declining 2.4 percent.

The agricultural contraction was largely attributed to declines of 61 percent in freshwater fishing and aquaculture, 15.1 percent in rice cultivation, 14.7 percent in sugar cane and tobacco cultivation, and 10.1 percent in marine fishing and aquaculture.

The department said heightened tensions in the Middle East, concerns over crude oil supplies and subdued tourism activity had affected the economic outlook during the quarter.