• Reading Sri Lanka’s economy through the numbers

Sri Lanka has completed one year under President Anura Kumara Dissanayake, a period shaped by stabilisation efforts, cautious optimism, and a steady push to normalise key economic indicators. 

This review looks at what the numbers showed around August 2024 and where they stood by August 2025, so readers can see change clearly. It focuses on inflation, growth, tourism, exports, workers’ remittances, and reserves, along with the prices of certain vegetables, fruits, and groceries. 

Inflation

Inflation is the measure most households feel first. 

In August 2024, prices in Colombo were almost flat, with headline inflation at 0.5% compared with 2.4% in July. Food prices rose just 0.8% and non-food prices 0.4%. On a monthly basis, the index fell 1.85%, while core inflation eased to 3.6% from 4.4%. The Central Bank of Sri Lanka (CBSL) expected inflation to stay below 5% in the short term before moving gradually towards the target.

By August 2025, the trend had shifted. After nearly a year of deflation, headline inflation turned positive at 1.2%, up from a deflation of 0.3% in July. Food inflation rose to 2% and non-food inflation turned positive at 0.8%. Month to month, the index dipped slightly, though non-food items showed a small rise. Core inflation inched up to 2%. In plain terms, prices that had been falling in 2024 were edging up again in 2025, but only modestly.

GDP 

Growth shows how the economy is moving. 

In the third quarter of 2024, Gross Domestic Product (GDP) grew 5.5% year-on-year. Agriculture rose 3%, industry jumped by 10.8%, and services gained by 2.6%. Industry’s surge came from construction, mining, and a wide mix of manufacturing activities, while services grew on the back of accommodation, IT, finance, and trade. Agriculture’s gains were led by cereals, tea, animal production, and fishing.

By the second quarter of 2025, GDP grew 4.9%, the eighth straight quarter of expansion. Agriculture increased by 2%, industry by 5.8%, and services by 3.9%. Construction and mining again stood out, while manufacturing grew across several lines, including apparel, metals, and refined petroleum. Services growth was broad, with IT, finance, accommodation, insurance, and transport leading the way.

Overall, growth eased slightly from 5.5% in late 2024 to 4.9% in mid-2025, but remained broad-based, supported by construction, manufacturing, and expanding services, with agriculture contributing steadily.

Tourism

Tourism, a key earner of jobs and foreign exchange, gathered pace in 2025. Between January and August 2024, arrivals stood at about 1.3 million. By August 2025, arrivals had already passed 1.5 million. The industry has set a target of three million visitors for 2025, and reaching the halfway mark this early is seen as a strong sign of recovery.

August traditionally benefits from the Kandy Esala Perahera, and in the first 13 days of August 2025, arrivals rose 17.1% year-on-year. The Sri Lanka Tourism Development Authority projected 248,279 visitors for the month, comfortably above August 2024’s 164,609 and potentially higher than the all-time monthly record of 200,359 in 2018. India remained the top source market, followed by the UK, Italy, France, and China.

Exports

Exports add another lens. 

From January to August 2024, total exports reached 10.6 billion dollars, helped by apparel and textiles, tea, rubber-based products, coconut-based products, and spices and concentrates. 

Notably, apparel and textiles once again crossed the $ 500 million mark in August 2024 after a gap of two years. Services exports were estimated at $ 318.77 million in August 2024, up 6.49% year-on-year, taking total exports for the month, goods plus services, to $ 1,483.13 million, an increase of 4.67% year-on-year. 

By August 2025, export strength continued. Total exports in August 2025, combining merchandise and services, reached $ 1,607.58 million, up 2.57% compared to August 2024. For January to August 2025, total exports came in at $ 11,554.32 million, an increase over the same period in 2024. 

Remittances and foreign reserves

Workers’ remittances and foreign reserves round out the external picture. 

From January to August 2024, workers’ remittances totalled $ 4,288 million, up from $ 3,863 million in the same period of 2023. Gross official reserves stood at $ 6 billion at end-August 2024. 

For 2025, data up to July show workers’ remittances of $ 4,435.2 million year-to-date, with July alone at $ 697 million, the highest monthly inflow since December 2020. Gross official reserves were $ 6.1 billion at end-July 2025. It is important to note that 2025 remittance and reserve data cited here are available only up to July.

How do they fare?

Speaking on the first year of the new administration, First Capital Chief Research and Strategy Officer Dimantha Mathew noted that while a degree of stability had been achieved, key challenges remained.

“In terms of stability and continuity of reforms, that has been somewhat achieved,” he said. “The restructuring process, which was supposed to be completed, was continued, and with that some level of stability has been achieved. Most of the economic indicators, like reserve targets, have also settled at a more stable level.”

He pointed out that continuity of policy between the previous regime and the current administration had played a role in creating this stability. “However, in terms of progress, there seems to be a slowdown in capital expenditure on the spending side of the budget,” he observed. “Since the economy is coming out of a crisis, there needs to be some Government support to push growth.”

According to Matthew, the slowdown in capital expenditure is beginning to affect growth. “GDP is also somewhat slowing down, and it might show very clearly in the upcoming quarters. That needs to be corrected,” he cautioned.

On reforms, he stressed that more work remained to be done, particularly with State-Owned Enterprises (SOEs), noting: “Some reforms have taken place at the Ceylon Electricity Board, but much more needs to be done in line with the International Monetary Fund (IMF) agreement. Successfully achieving this will help ensure sustainability of growth and provide safeguards for the economy not to slip back into crisis.”

The challenge for next year will be to build on this momentum, keeping inflation within target while ensuring growth translates into more jobs, higher incomes, and resilience. The numbers show that stability has returned. The question now is whether that stability can be turned into lasting gains for households and businesses across the country.

Item

Price in August 2024 (Pettah market – per kg, except where indicated)

Price in August 2025 (Pettah market – per kg, except where indicated)

Samba