- Global uncertainty clouds forecast: CBSL Governor
Sri Lanka’s projected economic growth for 2026 is likely to fall below its already lowered projections for the year if present global instability persists beyond the next six months, Central Bank Governor Nandalal Weerasinghe said yesterday (18) during the CBSL’s State of the Economy public lecture.
“Our forecast before the present economic situation was around 5%. Since it is unclear when things will stabilise, it is hard to forecast growth. The only thing we can do is see whether this will end in another three months, which would mean that the impact is only borne in those three months,” Weerasinghe said, noting that Sri Lanka’s overall growth for the year has the possibility of recovering by the end of the year if the instability is limited to within the next three months.
“If the three-month period of instability goes on to six or nine months, that will have a significant impact on growth.”
Weerasinghe said that prior to the publication of the State of the Economy Report of 2025, the expectation for economic growth in Sri Lanka was 5%.
“Due to this uncertainty, different outcomes can be predicted based on certain scenarios. In this instance, in the month of April, when we were going to publish this (report), even before, the expectation was that the economy would grow by 5%. However, after March and by April, due to the state of the global economy, it has been hard to forecast what might happen in the next three months.”
In October 2025, the International Monetary Fund (IMF) revised its own growth forecast for Sri Lanka this year from 3.5% to 3.1%, stating that the island nation was returning to its long-term growth trend following a period of sharp pre-crisis rebound.
The Sri Lankan economy grew by 5% in both 2024 and 2025. The World Bank, in its South Asia Economic Update report of April 2026, forecast 3.6% growth for Sri Lanka’s economy for the year.
“That is hard to forecast now, because none of us are unaware what might happen afterwards. Therefore, forecasting exact figures is hard. Now itself there is significant bearing on growth predictions during the last three months, with the rise in the price of fuel and inflation,” Weerasinghe said.
During the month of April, Brent crude prices increased by 12.70%, while WTI increased by 4.94%, mainly due to escalating geopolitical tensions in the Middle East.
Sri Lanka’s headline inflation reached 5.4% in April, up from 2.2% in March, exceeding the target set by the CBSL. The transport sector, in particular, saw the highest inflation with an 11.6% increase in prices from the same time period in 2025, whereas year-on-year inflation in March was only a 0.8% increase.