IMF sees Sri Lanka's growth cooling as energy shock lifts inflation

The International Monetary Fund (IMF) expected Sri Lanka's economic growth to slow to 4 percent this year and further to 3.7 percent in 2027.

The projections, released on Tuesday in the IMF's October 2026 World Economic Outlook, mark a clear step down from the 5-percent growth Sri Lanka recorded in 2025.

IMF estimated the country's inflation to climb to 5.3 percent, as the war in the Middle East drives up energy prices across import-dependent economies.

The turnaround in prices is sharp. Sri Lanka's consumer prices fell by 0.5 percent in 2025, but the IMF now projects inflation of 5.3 percent in 2026 and 5.4 percent in 2027, marginally above the Central Bank of Sri Lanka's 5 percent target.

The country's external position is also expected to weaken, with the current account moving from a surplus of 1.6 percent of GDP in 2025 to deficits of 0.5 percent in 2026 and 0.3 percent in 2027.

In addition, the IMF projects unemployment to hold at 3.9 percent over the three years.